Copper and aluminum prices likely will increase over the medium term on rising demand from electrification, a growing global economy and supply constraints, Jefferies analysts said Monday, recommending investors buy shares of preferred copper and aluminum producers, led by Alcoa (NYSE:AA) and Glencore (OTCPK:GLCNF) (OTCPK:GLNCY).

The bank says it is cautiously optimistic about the H2 outlook for mined commodity prices and says they will crunch numbers including global manufacturing PMIs, China credit growth and property market data to determine if demand is recovering from its Q2 soft patch.

India PMIs and U.S. ISM will also be important to track for 2H, while "interest rates, inflation, the Fed, and the outcome of the U.S. elections will all matter a lot as well," the analysts say.

The optimism stems from an expectation that China's industrial activity will marginally improve and economic growth will be strong in India and Southeast Asia, while infrastructure projects will likely break ground in the U.S. and the Fed could cut rates.

Fed rate cuts would be a significant positive and offset cyclical near-term risks, Jefferies says, also favoring Freeport-McMoRan (FCX), Lundin Mining (OTCPK:LUNMF) and Teck Resources (TECK).