Freeport booked an average copper price of $3.78 per pound in the fourth quarter, down from $4.41 a year earlier. Copper futures fell 2.5 cents to $4.21 a pound on Wednesday, holding near their highest level since May.
Copper prices rose on demand expectations as China’s economy reopens and the odds improve that Europe and the US will avoid recession this year. In the longer term, Freeport expects widespread copper supply shortages as new demand fueled by the green energy transition outstrips the capacity of mining projects currently under development. The mining investment needed to close that gap will require higher copper prices, Freeport said.
Estimates: FCX’s earnings were expected to fall 53% from a year ago to 45 cents per share. Revenue fell 12% to $5.4 billion.
Results: Adjusted EPS fell 46% to 52 cents as revenue fell 6.6% to $5. 76 billion.
Prospects: Freeport management now expects 2023 copper sales of 4.2 million pounds in 2023, flat from 2022. Expected gold sales of 1.7 million ounces will lag 1.8 million ounces in 2022. Unit cash costs rise to $1.60 per pound of copper versus $1.53. Q4 and $1.50 for all of 2022.
FCX stock rose 2.2% to 45.58 intraday on Wednesday, on track for the best close in nine months. FCX stock fell 0.8% to 44.59 on Tuesday. FCX stock broke out of a cup-with-handle base pattern on November 30th, clearing a 39.26 buy point. After trading in a tight range for four weeks, it broke higher again on January 6.
FCX stock is now a bit extended from its official buy point and its 50-day moving average. A longer period of basing or pullback to its 50-day line could put it back in play.
It is possible that FCX stock will forge a three-week tight, which could be used as a quasi-handle in a deep, 10-month consolidation.
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