The global copper market is in for a jolt as JPMorgan reports an expected balance in ROW (Rest of the World) demand recovery and supply tightness.
Key indicators reveal a 1.2% year-to-date surge in global output through November. Moreover, robust December data from Chile points towards substantial 2023 production.
Also Read: Experts Predict Copper Prices Set To Soar Over 75% By 2025, Thanks To Renewable Energy Transition, Supply Disruptions
Bullish Sentiment Prevails With Recovery in Rest of the World (RoW)
Despite sluggish RoW demand, solid consumption in China has managed to tip the scales. Spot treatment charges plummeted from $90/t in August 2023 to under $30/t, indicating a tight concentrate market.
Copper inventories are at multi-year lows, and JPMorgan predicts a balanced market in 2024, transitioning to a deficit in 2025 following recent supply disruptions such as Cobre Panama.
While copper fundamentals improve, recent copper prices have stalled due to a lackluster macroeconomic backdrop. The bullish outlook from JPMorgan counts on a 3.5% growth in China’s demand, further bolstered by a RoW recovery in the latter half of 2024.
Impact on Investors
Investors are greeted with a promising landscape. The current market conditions, poised between tightening supply and rebounding demand, signal a conducive environment for potential returns. The sector’s appealing valuations and dividend yields serve to amplify the allure for investors seeking exposure to the upbeat copper market dynamics.
Equity Opportunities: JPMorgan’s global copper miner stock ratings reflect a positive tilt based on the constructive copper outlook. The sector’s alluring valuation is underscored by a 2025E EV/EBITDA of 5.6x and a 2025E dividend yield of 5.1%. Notably, two U.S. traded stocks noted in the report offer promise:
- Freeport-McMoRan Inc FCX — Analyst Bill Peterson anticipates an 11% upside potential with this stock. Currently trading at around $38.7, Peterson has set a price target of $43 for the stock.
- Ivanhoe Electric Inc IE — Analyst Bill Peterson projects a 120% upside linked with this small-cap copper play. Ivanhoe Electric has a market cap of just under $1 billion and trades at around $8.2. Peterson has set a price target of $18 for the stock.
Read Next: Copper Bulls Rejoice As Freeport-McMoRan Stock Gleams With Golden Cross Triumph
Image: Shutterstock
