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Freeport-McMoRan Inc. (FCX)
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Chinese industrial production growth will be reported this evening. It will likely set tone for copper price tomorrow and couple more days ahead. The estimate is 6.9%. Certainly, Chinese numbers are inflated. However, they are still incomparably better than anything coming from west. China works, West talks. However, another combination says: China works, copper price grows.
Earnings coming up.. Announcement of the dividend 5, 7 or 10 cent?
Chinese numbers came in stronger than expected. The rest comes tomorrow. Watch Canadian market tomorrow. Good night now.
EPS Q4: $0.43/sh. before adjustments, ignoring Kisanfu sale.
CU $3.27 avg.
Gold $1,880 avg.
NA-CU: 380mm lbs. Q4
SA-CU: 256mm lbs. Q4
Indo-CU: 272mm lbs. Q4
Indo-AU: 260k oz Q4
Moly-Primary: Ignored but Q4 avg. price is about $11.25. Insignificant margin to consider.
NA Tax: 4%
SA Tax: 53%
Indo Tax: 47%
Interest: Up $12mm QoQ
Non-Cont. Int. up $56mm QoQ
Forex should help a little. +$0.03 to +$0.05
Diesel should cost them some. -$0.02
We should be OK on EPS provided NA copper output in Q4 matches Q3 volume.
They are estimating a 47mm lb. reduction in Q4 output vs. Q3 for that division in 2020e estimates for NA copper (made in Q3), which is puzzling, considering Lone Star should be contributing something in Q4. They said it was in Q3 CC slide No. 6. NA CU 2020e: 1,435mm lbs. - 1,103 = 332mm for Q4. Yet actual Q3 sales for NA was 379mm lbs. Why the drop?
If they only produce 1,435mm lbs. in NA for 2020e, Q4 EPS is $0.37/lb.
So more output/sales = wider margin of safety.
Lets hope they cracked the whip at Arizona mines. They might need it.
They can probably get creative for a few pennies with Adjusted EPS calc. if they are short a few. Street gave them a pass on $0.07/sh. of favorable adjustments in Q3.
But if they stepped on the pedal, they should easily beat.
Timing of copper sales during Q4 is always tricky, and won't be known until they report. Assuming ratable shipments, $3.27 avg. Last Q they changed how they priced. I ignored that. Just used $3.27/lb. Who knows but that feels right.
Metal inventory adjustments (and AR) should all be favorable (rising price environment) and were ignored.
Analysts keep upping their numbers, and it's pushing up consensus. Risk as they're getting close to the cliff edge.
Das ist alles.
Deutsche Bank raises today from $20 to $33. Late to the party?
KGHM Polska Miedz
Analysis of Copper Market
Jan 4th 2021
Excerpt (due to length of bi-monthly reporting):
The Chinese, fearing disruptions to copper production, mainly in Peruvian mines
and, to a lesser extent, in Chile, began to buy global surpluses of copper cathodes
from the market, which resulted in an almost twofold increase in imports of
refined copper products in individual months of Q2 and Q3 2020.
Between the lines, there are rumours that the Chinese State Reserve Bureau (SRB) has bought
up the surplus. Nevertheless, it is estimated that the so-called apparent demand,
i.e. the one calculated of demand on the basis of production, commercial and
warehouse data, increased in two digits last year, while the estimation of
purchases made by the SRB was 0.5-1 million tonnes.
Referring to the volume of demand for refined copper, these purchases (assuming an average
purchase level of 0.75 million tonnes) account for approx. 3% of the annual demand.
According to ICSG estimates, mining production decreased by 1.5% to 20.45
million tonnes, refined production increased by 1.6% (24.52 million tonnes),
while the demand for red metal remained at the level (24.49 million tonnes) from
2019. Such forecast implies a small deficit on the market of 50,000 tonnes.
KGHM data. [Big copper miner that shares lots of information with investors].
China's State Reserve Bureau [a safety valve for Chinese industry insuring supply of critical materials to Chinese industry] is believed to have purchased 3% of world demand of copper in 2020.
3% of annual demand, bought in Q2 and Q3.
This purchase does NOT include private 3rd party stockpiling during the same summer months of explosive levels of imports.
That might be another 1-2% of annual demand.
China will certainly be buying LESS refined copper from the rest of the world in 2021.
So if inventory levels start climbing in LME warehouses in 2021, this will be a big reason for it.
In 2021, China WILL buy more scrap. Nobody watches scrap, and reporting on it is very poor, and tough to find. Plus, it can be procured for significant discount to refined price(s). China is not dumb.
GREEN WAVE = GREEN MIRAGE. It's all about China. Always was, is, and will be. China, China, China.
If any of you who disagree have an argument more extensive than "Nah Uh.........solar !!!!", please enlighten the world to your contrary opinion.
Very positive article in Barron’s today on copper demand from renewable power generation.
Start of quote
Renewable energy generation is up to five times more copper intensive than conventional power because it is more decentralized and requires multiple, smaller units to be connected to the main grid, according to Calamos Research. A single onshore wind turbine requires more than four tons of copper.
End of quote
Obviously, I did not and cannot verify “five times” ratio. However, in qualitative terms, it is absolutely true: both power generation and distribution require lot of copper, while solar and wind units are substantially smaller than traditional power generation units and need to be connected.
Pop over 31 Am
Small slide then a green day
To early to tell I like to watch the next 60 mins usually tells a lot
Back at 915 that’s my initial thought let’s see how it plays out GL
Today - I don’t see a major slide
There are two inter-connected points that seem to be missed, sometimes, in copper supply-demand discussion on this board. Firstly, we invest in a copper stock, i.e. a company making copper, not in copper metal. Secondly, market is a forward looking mechanism. If market is confident that copper demand grows strongly in future, let’s even imagine 10 years mark proposed by some sources here, then copper-related equity prices will be well supported by market, even if copper price will have periods of relative weakness before the mark is reached. After all, list of copper stocks is pretty short, many big investors will likely take buy-on-every-dip and hold mode, expecting big copper demand growth in future.
How far away was todays earthquake in Indonesia?
Aluminum is brittle and can break under mechanical stress. It can cause, when used in electrical applications, at least break of electrical current, i.e. supply disruption and, in some unfortunate cases, a short-circuit and a fire. That’s the reason why aluminum wiring is outlawed in US residential homes. It can be still used in industrial applications; however, it is less reliable, more difficult to install than copper and require more maintenance, costly repairs.
Talking about power cables, they also like wiring can be made of aluminum. However, power cables can get broken too and consequences of power cable failures would be more serious and costly than failures in home wiring.
Btw, in my young age, I worked in power installation business, doing quite specific work, requiring manual installation of power units and components and I can tell you that no one wanted to work with aluminum and everyone wanted to work with copper. Assigning a person to do aluminum installation was kind of punishment and/or professional disrespect, and as it happens often enough, unloved assignment is usually performed with second-rate quality.
Sorry for taking message board space with a personal story only remotely related to this place.
Watching Gold and Silver continue sell off, and wonder of the Contradiction, of running to the safety of the US Dollar, while the US on many levels is in Crisis.
Option Report. The Jand 15 $31.50 and $32.50 Calls are hot, with 10,101 ($0.70 x .73) and 14,657 ($0.22 x .24) in volume respectively. No surprise I suppose given how the bid has been performing.
The Jan 22 $32 Calls catching some interest, too, at 2,151 ($0.96 x 1.01).
And out in March the Mar 19 $35 Calls are again hot with 5,917 ($1.98 x $2.00) in volume.
But for now I'll settle on a close north of $32. I'm riding a short from .45 as I noted earlier to Loopy that I felt the bid had overshot and run too far to the upside. My gamble was that in the final hour there'd be a profit taking p/b...possible to down around the $32 line. And so that's what is happening. Good guess.
I'm riding the short south with a trailing...and will close it regardless come closer to session close. Let's see how it plays from here. Bid $32.04...
From today’s Reuters article
Start of quote
BoA Securities analyst Michael Widmer said stocks in LME-registered warehouses suggest robust fundamentals.
“2021 will be a year of reflation, higher growth and strong demand for metals,” Widmer said, adding that he expects a small copper market deficit this year with demand rising to 24.76 million tonnes, up 6% from 2020.
End of quote
Also, fortunately, this quote has the numbers for overall Copper demand. It could be important for some “expert” of this message board making incessant demands to other posters to show various numbers.
FWIW: CFRA MAINTAINS STRONG BUY ON FCX - Increase 12-month target price by $7 to $36, assuming an EV/EBITDA of7.4x on our '21 EBITDA estimate, in line with FCX's three-year average forwardEV/ EBITDA. Maintain our '20 EPS estimate of $0.51 and raise '22's by $0.63 to $2.15. As copper currently trades $3.70 per pound, we think consensus earnings for FCX are still assuming copper average less than $3.25 perpound in '21. Several factors drive our continued bullish outlook for copper in 21, including strong Chinese demand, continued dollar weakness, and potentialsupply constraints at key mines. We think the global copper market has entered'21 in a very tight supply/ demand condition and incremental demand frominfrastructure and electrification of key end markets should move the coppermarket into growing deficits in '21 and '22. Meanwhile, FCX's transition atGrasberg (to underground mining)
Market looks pretty strong, while copper stocks are in driving seat, the leading sector. Take it easy and enjoy the ride. They will create more money to ensure that the ride continues.
Close price team - ?????
I’ve about had enough of this one today
I didn’t wanna be in this till Tuesday
But it is what is is fcx. Still remains strong we’ll recover 1.00 on Tuesday
China extends debt relief to DR Congo amid COVID-19 crisis
Al Jazeera English 5 days ago
Excerpts from article:
"China has granted some debt relief to the Democratic Republic of the Congo (DRC) to help it overcome economic fallout from the coronavirus pandemic, the Congolese foreign ministry said on Wednesday."
"As a result, the DRC will not have to repay its interest-free loans from China that matured at the end of 2020. The ministry did not say how much this amounted to."
"“As Congo’s most reliable friend, China wishes to continue to make its contribution to Congo’s development,” Wang was quoted as saying in the Congolese ministry’s statement."
"The major cobalt and copper producer has attracted billions of dollars in investment from Chinese miners in recent years."
"Congo’s exports to China surged 30 percent in 2020 compared with the previous year."
You can bet your sweet a z z that Chinese copper miners rushing to The Congo will get whatever permits they want approved...............APPROVED.............IN TEN MINUTES FLAT.
Welcome to the real world.
More copper will pour onto the market this year and next.
It's just an unfortunately reality, and there really won't be any markets to mop it all up.
Not even China (who wants lower prices anyway).
taking a bit off the table on this rise ... selling just outta the money calls against shares
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