Copper prices are starting to factor in a recovery - RBC

Nevada Copper

14/05/2020 11:12

** RBC Capital Markets says copper prices are starting to
factor in a recovery as supply reductions in industrial metals
have offset demand destruction from COVID-19
    ** Benchmark three-month copper on the London Metal Exchange
 CMCU3  has fallen nearly 16% so far this year. 
    ** However, brokerage warns that as mines return to full
capacity, there is a risk that copper and iron surplus could
weigh on prices
    ** While caution is still warranted as the global economy
gradually recovers from the COVID-19 pandemic, RBC sees
opportunity in select stocks
    ** RBC recommends North American miners First Quantum
 FM.TO , Lundin Mining  LUN.TO , Teck Resources  TECKb.TO  and
Ivanhoe  IVN.TO 
    ** FM provides the most potential upside to a recovery in
copper given the ramp-up of copper mine Cobre Panama, while
Lundin remains a steady copper producer with a strong balance
sheet - RBC
    ** Adds Ivanhoe's Kamoa-Kakula copper project continues to
create value, while Teck can unlock value with better execution
and a recovery in met coal 
    ** RBC expects copper demand to fall by 5% in 2020, which
assumes a 2% contraction of industrial output in China and 7%
globally
    ** Also sees risks to iron ore; says the metal's path
through 2020 is taking a different shape to other commodities,
with prices back to flat yoy
    ** RBC cuts PT on the following companies:
 Companies         PT changes 
 Trevali Mining    Cuts to C$0.2 from C$0.4
 Hudbay Minerals   Cuts to C$4 from C$5
 Nevada Copper     Cuts to C$0.5 from C$1
 Teck Resources    Cuts to C$20 from C$21
 Freeport-Mcmoran  Cuts to $11 from $14
 Nexa Resources    Cuts to $5 from $10
 Glencore          Cuts to 180P from 190P
 
 (Reporting by Arundhati Sarkar in Bengaluru)
 ((Arundhati.Sarkar@thomsonreuters.com; +1 646 223 8780 Ext:
2776; Reuters Messaging:
arundhati.sarkar.thomsonreuters.com@reuters.net))