Freeport-McMoRan: What’s Impacting This Major Copper Producer?



Key copper indicators

Spot copper prices were trading at $6,397 per metric ton on May 8, 2015. Prices of all base metals like aluminum, iron ore, and copper rebounded in April. This was preceded by a horrific run in January and February. While copper and aluminum have gained on a year-to-date basis, iron ore is still down ~20%. A decline in iron ore prices is a reflection of the slowdown in China, the largest buyer of seaborne iron ore.

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What you should know about Freeport and copper

What should investors know about Freeport-McMoRan (FCX) and other major copper producers? In this series, we’ll cover some key indicators that Freeport investors should track. We’ll also look at other major copper producers such as BHP Billiton (BHP) and Rio Tinto (RIO) and analyze recent trends in copper demand and supply dynamics. You’ll also see how copper demand is shaping up in China (FXI), the largest copper consumer.

This series will also take a look at the recent up-move in crude oil prices and how it’s impacting copper producers. Freeport’s share price has rebounded sharply in the last couple of weeks, as you can see in the above chart. Freeport currently forms 1.29% of the iShares North American Natural Resources ETF (IGE).

Copper dynamics

Copper dynamics are a bit different from other base metals like iron ore. Copper has much more diverse applications. Home appliance manufacturers, the construction industry, and the power sector are among the major end consumers of copper. Copper is highly durable and can be cast into precision shapes. This makes copper and its alloys ideal for making gears and bearings.

In the next part of this series, we’ll take a look at the recent trend in copper prices. Copper prices are a key driver of Freeport-McMoRan’s (FCX) earnings.


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