Nomura Securities Metal Insights: Copper Market Suggests Short Term Risks; Reiterate 'Neutral' on Freeport-McMoRan (FCX)

May 3, 2012 10:27 AM EDT
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Nomura Securities Metal Insights: Copper market suggests short term risks; reiterate Neutral on Freeport-McMoRan (NYSE: FCX)

Analyst, Curt Woodworth, said, "We believe copper price can fall to as low as $3.4/lb ($7,500/t) during 2Q-3Q. LME copper market has been undergoing a short-term squeeze, which has supported spot prices. However, signs are emerging that cash prices could come under more pressure as metals availability improves. The recent spike in cancelled warrants in late April reached 40% of total LME inventory, the highest level in the past eight years. Negative cost of carry on LME and negative SHFE-LME arbitrage will result in increased pressure for traders holding copper stocks to deliver onto the LME. We see limited catalysts for FCX in the short term, given seasonal weakness typically experienced this time of year, which could be amplified by destocking trends in China."

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