Freeport-McMoRan (FCX) - Get Report shares jumped higher in pre-market trading Monday as copper prices hit fresh all-time highs in London and Shanghai powered by surging demand and a global supply deficit.
Copper futures on the London Metals Exchange hit $10,747.50 in overnight trading Monday, extending their year-to-date gain to around 40%, as investors bet on a faster post-COVID recovery for the global economy powered by construction and low-carbon project developments. Copper futures on the Shanghai market passed the $12,000 mark Monday, as well, amid tightening supplies in the world's biggest market.
"The combination of rising demand, scarcity of new supplies point to large impending structural deficits, supporting much higher copper prices than previously anticipated," CEO Richard Adkerson told investors on a conference call following the group's first quarter earnings in April. "Freeport is notably well positioned to benefit from these fundamentals, a leading responsible large-scale producer of copper with near-term and longer-term growth embedded in our portfolio.
Freeport-McMoRan shares were marked 3.4% higher in early trading Monday to change hands at $45.54 each, the highest since May 2011 and a move that would extend the stock's year-to-date gain to around 75%.
China, in fact, posted copper consumption growth of 17.7% for the first quarter, customs data indicated as it looks to speed-up investments in infrastructure. PMI data from the world's second-largest economy, as well as robust April imports, suggest demand is likely to remain elevated between now and the end of the year.
Manufacturing PMI data in Europe, meanwhile, indicated the fastest level of activity on record last week, while the CRU Group has forecast a global supply deficit of around 4.7 million metric tons by the year 2030.
In the U.S., copper demand is set to accelerate as President Joe Biden moves on his $2.3 trillion infrastructure bill this week, with planned meetings with Republican and Democratic lawmakers at the White House.
Freeport-McMoRan nudged its full-year cooper production targets higher last month, to 3.8 billion tons this year and 4.4 billion in 2022.
"It is becoming increasingly more challenging and costly for our industry to develop supplies to meet the dramatically increasing demand for copper," Adkerson said. "And our team literally loves where our Freeport is situated in this environment."