Freeport-McMoRan (FCX), the leading US-based copper miner, has lost 42.7% YTD (year-to-date) based on the closing prices on November 23. Other copper miners like Southern Copper (SCCO) and Antofagasta (ANTO) have also fallen in 2018. Vale (VALE) is in the green in 2018. Iron ore prices have been relatively strong despite the rout in other metals (XME).
Freeport-McMoRan is a pure-play copper miner since the company exited its energy assets. Copper is one of the metals where most analysts have a bullish outlook, at least in the medium to long term. The mined copper supply is expected to fall short of the demand in the next decade, which should support copper prices.
On the demand side, rising electric vehicle sales bode well for global copper demand. The copper intensity is higher in electric vehicles compared to traditional internal combustion engines. Despite the rout in metal prices, copper is still holding onto the $6,000 per metric ton level.
While copper’s long-term fundamentals look strong, the short-term outlook has been muddied amid the US-China trade war. Copper prices tend to react to geopolitical developments and traders use copper to play the global economy. Since the global economic mood has soured in the last few months, copper has also seen a selling spree despite no major change in its long-term fundamentals.
Along with the US-China trade war, Freeport-McMoRan has a few other concerns. Read Is There More heat Left in Freeport-McMoRan’s Rally? to explore what’s been ailing Freeport-McMoRan stock in 2018.
Next, we’ll discuss how different metals have performed in 2018.
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