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Freeport McMoRan, Mining Stocks Fall on Lower Pricing, China Demand

Freeport McMoRan, Vale and other mining stocks fall as metals prices sink, Chinese steel demand wanes and the Fed may taper soon.
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Mining stocks, such as Freeport McMoRan  (FCX) - Get Freeport-McMoRan, Inc. (FCX) Report and Vale  (VALE) - Get Vale S.A. Sponsored ADR Report, fell on Thursday as metals prices are sinking, Chinese steel demand is waning and the Federal Reserve may curb bond purchases soon.

The Bloomberg Commodity Index recently stood at 91.68, down 2%, and earlier hit a six-week low.

BMO analyst Jackie Przybylowski said mining fundamentals are behind the stock decline, according to Bloomberg.

“Second-quarter earnings raised more questions than they solved about the ability of many companies to hit full-year guidance targets, the stability and predictability of capital returns to shareholders, and even the outlooks for commodity prices,” she said.

Jefferies analyst Christopher LaFemina offered a positive take going forward. “Our base-case assumption is that the current soft patch is followed by a recovery in demand later this year or in early 2022, and the copper price will materially increase as a result,” he said according to Bloomberg.

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Freeport, Glencore  (GLNCY) , First Quantum  (FQVLF)  and Antofagasta  (ANFGF)  should reap the rewards of higher copper prices, he said.

But the near term isn’t so great, RBC analyst Sam Crittenden wrote, according to Bloomberg. Until demand for iron ore improves in China, prices might continue to slump, as China’s inventory remains high, and supply is on track to ascend, he said.

Freeport recently traded at $31.79, down 6%; Vale at $18.14, down 6%; Glencore at $8.34, down 4%; and First Quantum at $17.97, down 7%.

As for the Fed, comments from its officials have sparked speculation a tapering of economic stimulus is coming this year, which could shrink demand for metals.