Is It Time to Fall in Love with Copper Stocks?



Copper stocks

We’re getting towards the end of the second quarter. Early in 2018, copper was rangebound. However, we have seen a spike in copper prices due to concerns about labor action at BHP Billiton’s (BHP) Escondida mine. Notably, Escondida is the world’s largest copper mine followed by Freeport-McMoRan’s (FCX) Grasberg mine.

The Grasberg mine has also been in the news due to the tussle between Freeport-McMoRan and the Indonesian government. Rio Tinto (RIO), which is Freeport’s minority partner at the Grasberg mine, is negotiating a stake sale with the Indonesian government. Copper’s 2018 bullish thesis was built around supply disruption. Along with the Escondida mine, several other labor contracts at leading copper mines are coming up for negotiation this year. So far, the labor negotiations have been smooth including Antofagasta’s (ANTO) Los Pelambres mine.

On the demand side, China’s copper imports have been strong this year. Copper imports have registered a strong yearly increase for unwrought copper and copper concentrates. Read US-China Trade Deficit Wobbles amid President Trump’s Tariffs for a detailed analysis of China’s metals trade data in May.

Series overview

In this series, we’ll see how analysts rate leading copper mining companies. We’ll also see how analysts have changed their ratings on copper miners. Next, we’ll discuss Southern Copper’s (SCCO) ratings and consensus target price.

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