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Freeport-McMoRan and Copper Slip from 2017 Highs: What’s Next?

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Sep. 19 2017, Updated 8:11 a.m. ET

Freeport-McMoRan

Copper has been flying high for the last couple of months. Copper miners such as Freeport-McMoRan (FCX), Southern Copper (SCCO), and Glencore (GLNCY) also piggybacked copper and moved to higher price levels.

Despite most analysts warning about a possible bubble in copper prices (XME), bulls went on a rampage, and copper prices topped $6,500 per metric ton on the London Metals Exchange (or LME).

Copper prices touched a three-year high in early September 2017. Bulls cited an improved demand environment amid falling ore grades at major mines to justify their optimism. A weaker US dollar and China’s announcement to ban certain copper scrap imports provided the impetus that copper bulls were waiting for.

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Reversal?

However, we’ve seen some reversal in copper prices in the last week. The trigger has been soft economic data from China. Copper, as well as the entire industrial metals sector, can be quite sensitive to Chinese economic data.

Because the country accounts for a major portion of global copper demand (BHP), any indication of a slowdown in its economic activity—especially in its real estate and infrastructure sector—could send ripples through the base metal markets.

Series overview

In this series, we’ll see what lies ahead for Freeport-McMoRan (FCX) and copper. We’ll look at some of the technical and fundamental indicators to analyze FCX’s outlook. We’ll also look at some of the company-specific factors that seem to be weighing on Freeport-McMoRan stock.

In the next article, we’ll look at Freeport-McMoRan’s short interest ratio.

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