uploads///part  copper prices

Could Southern Copper Offer Stable Returns in Global Sell-Off?


Sep. 20 2015, Published 11:21 a.m. ET

How is copper doing?

Commodity prices, including copper, are having a seesaw year in 2015. Copper started the year on a weak note and fell ~15% in January alone. Spot copper prices hit a six-year low of $5,301 per ton on January 29. However, copper prices recovered nicely after that, hitting $6,448 per ton on May 12.

But then copper’s downslide started again. Spot copper prices made a closing low of $4,888 per ton on August 24. Copper prices have recovered somewhat after hitting the sub-$5,000-per-ton level. On September 15, spot copper closed at $5,290 per metric ton on the London Metals Exchange, up 8% from its 2015 lows.

You can see the recent volatility in copper prices in the graph above.

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Global sell-off

Copper’s volatility is reflected in the share prices of copper-producing companies. Freeport-McMoRan (FCX) touched its 13-year low this year. Teck Resources (TCK) is also trading at multi-year lows. The sell-off in Freeport and Teck Resources intensified due to their energy exposure. Freeport holds oil and gas assets, while Teck Resources has a portfolio of coal mines.

The rout is not limited to copper companies alone. Metal shares from steel to aluminum have traded weakly this year. The slowdown in China, global risk-off, and perennial overproduction have weighed heavily on metal and mining companies’ (XME) share prices.

However, Southern Copper (SCCO) has managed to hold its ground amid the global sell-off in metal shares. Based on September 15 closing prices, SCCO’s stock is down only about 2% this year. That’s much less than most other commodity companies.

Currently, Southern Copper forms 1.85% of the iShares Latin America 40 ETF (ILF).

Series overview

In this series, we’ll present Southern Copper’s complete business overview. This should help you better understand the company’s business. We’ll also explore SCCO’s key financials and see how they stack up compared to other copper companies.

Let’s begin by looking at Southern Copper’s historical timeline in the next part of this series.


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