Freeport-McMoRan was the top S&P 500 performer early Tuesday after an upgrade from BofA analyst Lawson Winder, who spoke with CEO Kathleen Quirk about the recovery effort following a Sept. 8 disaster at the world's second-largest copper mine. FCX stock built on Monday's bounce-back session, attempting to regain long-term support.
Winder said that while he didn't receive any new material information, he came away sensing less downside risk to the timeline for restarting the company's Grasberg mine in Indonesia. While upgrading FCX stock to buy from neutral, BoA reiterated its 42 price target — 12% above where shares ended Monday's session.
Copper Supply Deficit Now Seen
Freeport-McMoRan said on Sept. 24 that two workers were confirmed dead and five remained missing after a "mud rush incident" involving 800,000 metric tons of wet material. Sales from the mine are now expected to be "insignificant" in Q4, down from projections of 445 million pounds of copper and 345,00 ounces of gold.
Under a phased restart, the company expects production to be 35% lower in 2026 than previous estimates of 1.7 billion pounds of copper and 1.6 million ounces of gold.
Last week, Goldman Sachs said the supply disruption shifted its projected global copper balance from a surplus of 105,000 tons to a deficit of 55,000 tons, though 2026 should see a small surplus, according to Mining.com.
The near-term copper futures price surged from around $4.60 a pound to $4.90 a pound, following Freeport's updated outlook, but has since backed off to around $4.84. Lower risk surrounding the mine restart has the copper futures prices inching lower on Tuesday.
FCX, BHP, RIO
FCX stock trimmed initial gains to 0.8% Tuesday, trading near 37.42 in morning stock market action. That left FCX still below its 200-day moving average, which is near 40.
Other miners with significant copper exposure have climbed amid Freeport's tragedy due to the significant tightening of the market. BHP Group jumped 2.7% to 56.22 on Monday, reclaiming a 55.38 cup-with-handle buy point. But BHP is 1.4% lower on Tuesday on news that China has temporarily halted purchases of BHP cargoes over a pricing dispute.
Rio Tinto group rose 1.7% to 65.92 on Monday, reclaiming a 64.76 flat-base buy point. Southern Copper has climbed out of buy range, while Teck Resources has already rallied 14% after testing long-term support on Sept. 23.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
