Mining MarketWatch

Feature article May 16, 2024:

Stable Investment Exposure to Copper via Long Position in Freeport-McMoRan

Freeport-McMoRan Inc.

(NYSE: FCX)

Share data, Capitalization, & Corporate info

Shares Outstanding: ~1.44 billion

Recently Traded: ~US$52.00/share (NYSE:FCX)

52 Week High/Low: ~$54.09/ 32.83

Current Market Cap.: ~$74.75 billion USD

Corporate Website: fcx.com

Valuation Commentary: Freeport-McMoRan Inc. (NYSE: FCX) Freeport is the world’s largest publicly traded copper producer. It has operations in the U.S., Latin America, and Indonesia.

Copper prices are volatile. They can whipsaw up and down based on the slightest economic news. So, when it comes to investing in copper miners, their cost to mine matters. Freeport happens to be one of the lowest cost copper miners in the world. Last year, it mined copper at an average of $1.61 per pound. It sold that copper for an average of $3.85 per pound.

Copper is the hottest commodity today and of the future; see related article on the fundamental case for copper in "The Copper Supply Shortage Is Here" -- copper is an essential material to produce and distribute power in the next-gen AI economy. The drive towards electrification, whether that's electric vehicles and data centers powering artificial intelligence, as well as reshoring manufacturing trends. Copper is currently the subject of a massive Comex short squeeze; In-short...

Copper prices on the Comex exchange have experienced a historic short squeeze, driving up prices to record highs and creating a significant premium for New York copper futures above the London Metal Exchange price.
The short squeeze was caused by market participants who had placed bets on the Comex contract moving back in line with prices on the LME and in Shanghai being forced to buy back their positions as prices rose, creating a vicious cycle.
The surge in copper prices is not solely driven by technical factors but also reflects increased interest from speculators and forecasts that long-term copper mine production will struggle to keep pace with demand. Other factors may be Chinese smelters curbing production, and greater infrastructure spending.
The tight supplies in the US copper market have been highlighted by the short squeeze, with inventories tracked by the Comex and LME in the US being relatively low compared to annual US copper demand.
Traders and miners in South America, particularly Chilean copper-mining giant Codelco, have been racing to boost their shipments to the US to address the supply shortage caused by the short squeeze. However, shipping schedules are fully booked, posing challenges for further metal delivery to the US.

One thing’s for certain, every tick higher on the price of copper puts more money in Freeport’s pockets. And ultimately, may lead to a higher stock price and higher dividends for shareholders.