Copper Prices Plummet: Goldman Sachs Slashes Forecast, Affecting Miners’ Stocks
- Goldman Sachs cuts its copper price forecast
- Freeport-McMoRan stock falls due to lower copper demand from China
- Copper prices have dropped by 19% since May
- Federal Reserve may cut interest rates this month
- Jeff Currie maintains copper prices could rise in the next few years
Shares of Freeport-McMoRan and other copper miners have been declining after Goldman Sachs stopped recommending the purchase of copper and reduced its price prediction for the metal. The bank now anticipates an average price of $10,100 per ton by year’s end, down from its previous expectation of $15,000. Higher copper inventories in China and a weak property sector have delayed the price rally, according to a note on Monday. Copper experienced record levels in May due to increased demand from utilities, electric vehicles, and data centers. However, supply remained elevated while demand from China, the world’s primary consumer of copper, weakened. With China typically responsible for two-thirds of commodity demand growth before the pandemic, it is difficult to create significant deficits without strong Chinese demand. As a result, companies that generate revenue from mining copper have been affected. Freeport-McMoRan stock dropped by 3.5%, and Rio Tinto fell by 3.9% in premarket trading on Tuesday. Copper company shares often suffer when prices decrease, leading to reduced sales and depreciating earnings and margins. Despite this, the Federal Reserve may cut interest rates this month, encouraging businesses to spend more and potentially boosting copper demand. Jeff Currie, Carlyle’s chief strategy officer for energy pathways and a former Goldman analyst, maintained last month that copper prices could rise in the next few years.
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Factuality Level: 8
Factuality Justification: The article provides accurate information about Goldman Sachs’ change in its copper price forecast and its impact on copper miners like Freeport-McMoRan. It also discusses the reasons behind the price drop (increased inventories in China and weak property sector) and potential factors that could affect the market (Federal Reserve cutting interest rates). The article is mostly focused on the topic without any significant digressions or personal opinions.
Noise Level: 3
Noise Justification: The article provides relevant information about Goldman Sachs’ change in its copper price forecast and its impact on copper mining companies’ stocks. It also mentions the reasons behind the price drop (elevated production and weakened demand from China) and a potential silver lining (Federal Reserve cutting interest rates). However, it could benefit from more analysis of long-term trends or possibilities and actionable insights for investors.
Public Companies: Freeport-McMoRan (FCX), Rio Tinto (RIO), Goldman Sachs (GS)
Private Companies: Carlyle
Key People: Samantha Dart (Analyst at Goldman Sachs), Daan Struyven (Analyst at Goldman Sachs), Jeff Currie (Chief Strategy Officer for Energy Pathways at Carlyle), Karishma Vanjani (Writer)
Financial Relevance: Yes
Financial Markets Impacted: Copper miners’ shares, such as Freeport-McMoRan and Rio Tinto, are impacted due to Goldman Sachs changing its copper price forecast and expectations. The Federal Reserve cutting interest rates could also affect the market.
Financial Rating Justification: The article discusses changes in copper prices and their impact on mining companies’ shares, as well as potential effects from interest rate cuts by the Federal Reserve.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.
Move Size: Copper prices have come down some 19%
Sector: Technology
Direction: Down
Magnitude: Large
Affected Instruments: Stocks
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