- Copper prices have fallen 17% from four-year highs set in June, hurt by worries that weakness in China's economy will lead to lower demand for metals widely used in construction and manufacturing.
- A stronger dollar also has hurt copper and other base metals by making them more expensive for overseas buyers.
- Freeport McMoran (NYSE:FCX) CEO Richard Adkerson said this week during its earnings conference call that the gloomy outlook and uncertainty was causing the company to slow plans for large scale expansion projects.
- Shares of FCX and major producers Southern Copper (NYSE:SCCO) and First Quantum (OTCPK:FQVLF) fell this week to 52-week lows.
- The recent moves in copper, given its reputation as “Dr. Copper” for its predictive powers at turning points in the economy, suggest that investors are not optimistic about the outlook for equities, Banyan Hill analyst Matthew Badiali tells Barron's.
- “Tariffs are like huge tax bombs: They will either get passed on to the consumer, reducing their ability to spend, or they will hit the producers, which will drive down earnings,” Badiali says. adding that in the short term, the U.S.-China trade war will “hit companies that couldn’t pass [tariffs] on to consumers,” and longer term, “it will impact consumption.”
- ETFs: OTCPK:JJCTF, COPX, CU, CPER, CUPM
- Now read: Freeport-McMoRan: Stalking Lower Prices
Original article