Freeport-McMoRan Poised For Gains From US Copper Tariffs
What's going on here?
Freeport-McMoRan, a major player in copper, could benefit from potential US tariffs on copper imports, as highlighted by RBC Capital Markets.
What does this mean?
Though the US-based copper producer is underperforming compared to current copper prices and its peers, a proposed 25% tariff could increase its EBITDA[1] by 9% or approximately £700 million by 2026. Currently, Freeport-McMoRan shares are at £37.21, under RBC's £52 price target. Rising gold prices, which contribute around 15% to its revenue[2], also support the company.
However, there are hurdles due to delays in obtaining an Indonesian export[3] license and concerns over global economic growth that might hinder its performance. Speculation about tariffs has recently pushed copper prices higher, posing both risks and opportunities for Freeport-McMoRan.
Why should I care?
For markets: Copper tariffs electrify the market.
The possibility of US copper tariffs could strengthen Freeport-McMoRan's market position. As the only major US producer likely to benefit from a copper premium, increased tariffs might improve its competitive edge and potentially lead to a stock[4] rebound if investors regain confidence.
The bigger picture: Global economic ripples.
US tariffs on copper imports could have wide-ranging effects on global markets.
These economic policies may shift trade dynamics and alter investment patterns, marking a significant change in how countries approach natural resource exports and imports.