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The global copper market is expected to balance as ROW (Rest of the World) demand recovers and supply tightens, according to a report from JPMorgan.
Key indicators include a 1.2% year-to-date increase in global output through November, with strong December data from Chile indicating solid 2023 production.
Despite a weak RoW demand, robust consumption in China has offset the balance. Spot treatment charges have sharply dropped from $90/t in August 2023 to below $30/t, signaling a tight concentrate market.
Copper inventories remain at multi-year lows, and JPMorgan anticipates a balanced market in 2024, shifting to a deficit in 2025 following recent supply disruptions like Cobre Panama.
While copper fundamentals improve, recent copper prices have moved sideways due to an uninspiring macroeconomic backdrop. JPMorgan’s bullish outlook relies on a 3.5% growth in China’s demand, further supported by a recovery in the RoW in the second half of 2024.
Investors are presented with an optimistic backdrop. The current market conditions, with tightening supply and recovering demand, suggest a favorable environment for potential returns. The sector’s attractive valuations and dividend yields further enhance the appeal for investors seeking exposure to the positive copper market dynamics.
Equity Opportunities: JPMorgan’s global copper miner stock ratings align with a positive bias based on the constructive copper outlook. The sector’s attractive valuation is highlighted by a 2025E EV/EBITDA of 5.6x and a 2025E dividend yield of 5.1%. Notably, two U.S. traded stocks found in the report offered promise:
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