The global copper market is projected to achieve a balance as Rest of the World (RoW) demand rebounds and supply constricts, as per a report by JPMorgan.

Major indicators demonstrate a 1.2% year-to-date expansion in global output through November, with strong December data from Chile signaling robust 2023 production.

Bullish View Strengthened By RoW Recovery

Despite weakened RoW demand, China’s robust consumption has counterbalanced the equilibrium. Spot treatment charges have plummeted dramatically from $90/t in August 2023 to below $30/t, pointing to a tight concentrate market.

Copper inventories are at multi-year lows, and JPMorgan expects a balanced market in 2024, transitioning to a deficit in 2025 following recent supply disruptions such as Cobre Panama.

While copper fundamentals improve, recent copper prices have stagnated due to an uninspiring macroeconomic environment. JPMorgan’s optimistic outlook is contingent on a 3.5% surge in China’s demand, further bolstered by a RoW recovery in the latter half of 2024.

Implications for Investors

Investors are presented with an encouraging backdrop. The current market conditions, characterized by tightening supply and resurging demand, indicate a favorable environment for potential returns. The sector’s appealing valuations and dividend yields further enhance its allure for investors seeking exposure to the positive copper market dynamics.

Equity Opportunities: JPMorgan’s global copper miner stock ratings lean toward a positive bias based on the favorable copper outlook. The sector’s inviting valuation is underscored by a 2025E EV/EBITDA of 5.6x and a 2025E dividend yield of 5.1%. Notably, two U.S. traded stocks found in the report offered promise:

• Freeport-McMoRan Inc FCX — Analyst Bill Peterson sees an 11% upside potential with this stock. Currently trading at around $38.7, Peterson has a price target of $43 on the stock.
• Ivanhoe Electric Inc IE — Analyst Bill Peterson sees a 120% upside associated with this small-cap copper play. Ivanhoe Electric has a market cap of just under $1 billion and trades at around $8.2. Peterson has a price target of $18 on the stock.