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Freeport-McMoRan Inc. (FCX)
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London Metal Exchange has to restrain disorderly copper
By Andy Home
OCT 21, 2021 10:45AM EDT
LONDON, Oct 21 (Reuters) - This was the week Doctor Copper turned disorderly.
The London Metal Exchange (LME) was forced to apply the restraints as a ferocious squeeze rocked the market, with the premium for cash metal spiralling out of control to an unprecedented $1,103.50 per tonne at one stage on Monday as the exchange's monthly prompt date descended into chaos.
TROUBLE WITH COPPER
It's clear from both LME and Trafigura statements that the two have been in regulatory dialogue about the trader's copper positions and its draw on exchange stocks.
Cynics will scoff at the company's quoted claim the metal is needed to satisfy customer needs in China and Asia, but global exchange stocks of copper were just 312,200 tonnes at the end of September with Shanghai stocks sitting at a multi-year low of 43,500 tonnes.
Compare and contrast with the early 1990s copper market, when the LME warehouse system - much more geographically concentrated than it is now - held more than 600,000 tonnes at one stage. Indeed, the ballooning costs of supporting the copper price in a surplus market were what did for Sumitomo's Hamanaka in the end.
Is the current dearth of LME copper a manufactured shortage or another sign of a broader supply-chain crisis?
We're going to find out very shortly since every available tonne of copper should be heading towards an LME warehouse to capitalise on the record delivery incentive.
For now tom-next has stopped flashing red, slipping back into more orderly contango Thursday morning, suggesting the turmoil has abated.
But if exchange stocks don't rebuild, the LME Special Committee is going to have its work cut out.
LME actions being taken against Trafigura taking the phony steam out of the manipulated LME copper market, and the price is correcting.
The mirage of "copper market tightness" was all engineered and phony according to the LME.
Trafigura will find themselves in court, dragged there by commercial parties in due course.
Unless you are playing options..as a long you should be happy ..an earnings beat with the ave cu price of $4.2 and better than expected costs. .those expecting a dividend announcement are disappointed but why? Last call they already said next year. The stock has held most of the gains in the run up and above the moving averages...it absorbed a 16cent pullback .I'll trade a small lost in sp over a 16 cent loss in cu price. Plus as some have mentioned fcx doesn't really move on earnings day and usually has a delayed reaction maybe due to options expiration. Let some options expire and get some of the hot money out from last week. Not much you can do unless you can day trade it successfully...looking for a breakout of $39 before it's all clear for the longs.
Net income 0.94 cents per share,adjusted net income 0.89 cents per share with avg copper price of 4.20 per pound…..copper now 4.62… do the math… great performance and dividends ahead
I picked up another 400 shares the other day anticipating good earning.
My hope is that we get a buyback here to start in 2022 and not a special dividend. Having FCX in the market buying back stock is the best thing for share holders. With copper above $4.00 they are printing money.
I am not a short term investor so for me I don't care about the day to day movement of the stock. The question I am asking is where is FCX 6 month or 12 months from today. As long as copper is north of $3.50 this company is printing money and I expect patient share holder will be rewarded. ( As we should)
With Copper north of $4.50 the amount of money being generated is insane and this will translate in a higher stock price.
AS for the shorts, I am not sure I understand your position on this one. This baby is going higher and not sure why you want to fight an army of tanks with a 9mm pistol
It seems unlikely that the stock will get much of a pop on Thursday’s earnings announcement. It will be difficult for FCX to beat expectations. I don’t know if analyst's production/shipping estimates were adequately trimmed for Covid related issues. Of course, Q3 commodity prices are well known by analysts. There will be no surprise there.
The average earning estimate of 81 cents vs 73 cents in Q2 seems a reasonable expectation based solely on Q3 copper prices. Based on past comments, management is unlikely to discuss stock buybacks, or the variable dividend details, until April.
I think that a decent but unspectacular earnings report and CC may drive the stock down by a point or two... but the chances for a subsequent recovery and a new interim high are good. In this time of bitcoin, meme stocks, and the market’s love of clean electric power, copper looks pretty good. Positive Covid-related economic recovery news -- from China or anywhere else -- will be the catalyst.
Of course, I’m ignoring what many believe will be a market correction before year-end. I just don't see it... but I have been wrong before.
Trafigura Played Key Role in Draining LME Copper Inventories
By Jack Farchy and Mark Burton
October 19, 2021, 11:07 AM EDT Updated on October 19, 2021, 5:40 PM EDT
Trafigura Group withdrew a significant proportion of copper that’s been pulled from London Metal Exchange warehouses, contributing to wild swings in prices, according to people familiar with the matter.
The drawdown has made the trading house the talk of the copper market, helping to drive available stocks to the lowest since 1974 and pushing a key spread to the highest on record. It’s also helped to spur outright copper prices higher, with benchmark futures up about 13% since the start of the month and approaching record highs set in May.
It’s not unusual for physical traders to withdraw metal from the exchange to ship to their customers, and Trafigura isn’t the only trading house to have taken metal off the exchange in recent months, the people said. And the move comes against a backdrop of very low inventories globally.
Still, total requests to withdraw more than 150,000 tons of copper from LME warehouses in the past two months have all but drained the available stocks on the exchange, and Trafigura represents a significant proportion of those, the people said.
A spokeswoman for Trafigura declined to comment.
The LME responded Tuesday to the dramatic moves in copper by adjusting rules governing the market, including by imposing limits on the shortest-term spreads. The changes were made “to maintain continued market orderliness and avoid the development of an undesirable situation,” and are intended to be temporary, it said.
The LME also launched an inquiry into recent trading in copper. Late on Tuesday, it emailed members asking for details about client activity in copper warrants going back to early August, according to people familiar with the matter.
The move in LME stocks shifted the market sentiment over the course of last week, as traders gathered in London for LME Week, said Citigroup Inc. analyst Max Layton.
“The bullish physical sentiment for copper intensified through the week amid the sharp decline in LME on-warrant stock levels,” he said, referring to metal that’s not already earmarked for withdrawal. “Prior to this, the physical backdrop to copper had seemed much more benign then the likes of zinc.”
During the pandemic, Trafigura has emerged as one of the most high-profile bulls in the global copper market, with head trader Kostas Bintas predicting that prices will hit $15,000 in the coming years as the industry witnesses a new supercycle underpinned by booming demand in electric vehicles and renewable energy.
Even with macroeconomic headwinds mounting during a global energy crunch, Bintas said earlier this month that rapidly dwindling stockpiles were undergirding the outlook for prices. So far, the surge in power markets has had a disproportionate impact on supply, while firm demand has added to the strain on global inventories, he said.
Trafigura traded 4.4 million tons of copper last year, one million tons more than its largest rival, Glencore Plc. After years of intense competition, it overtook Glencore as the top trader in 2019, and has since extended its lead as the latter’s volumes have shrunk.
Somebody got caught cheating. I suspected Trifigura was behind this LME scam. Crooks. Expect copper to reverse course just a quick as the manipulated futures traders bid it up. Enjoy.
10/21/2021 - 07:45:00 - Freeport-McMoRan Announces Redemption of 3.55% Senior Notes Due 2022. All of its outstanding $524.0 million aggregate principal amount of 3.55% Senior Notes due 2022 (3.55% Notes), at a redemption price equal to 100% of the principal amount of the 3.55% Notes outstanding, plus accrued and unpaid interest to, but not including, the redemption date.
On October 21, 2021 , U.S. Bank National Association , as trustee for the 3.55% Notes, distributed to the registered note holders written notice of the terms of this redemption.
FCX will use cash to fund the redemption. At September 30, 2021 , FCX had $9.7 billion in consolidated debt and consolidated cash and cash equivalents of $7.7 billion . Annual interest costs associated with the 3.55% Notes approximate $19 million .
While I am still long here many have been hurt before. Earnings will be good and there may even be some decent news from RA. However, those stop-loss orders will get triggered when the share price fails to appreciate and folks run for the doors fearing the inevitable drop. I will be here still as the share price recovers over the next few weeks. Hope I am wrong.
Amother Major miss on giving date or time table on Buy back, Or Div Special. What a great time to give stock holders info that would move the stock higher. Very good call telling about operations, But very #$%$ for stock price to move higher. What I will say same old #$%$
Even RA & KQ shouldn’t be able to cast a negative light on this earnings report, right?
Freeport-McMoRan Inc. said it expects to sell about 3.8 billion pounds of copper, 1.3 million ounces of gold and 85 million pounds of molybdenum for the full year.
The mining company on Thursday said it sees consolidated sales of 1.025 billion pounds of copper, 375 thousand ounces of gold and 22 million pounds of molybdenum for the fourth quarter.
"The outlook for the copper market is extraordinarily positive," Chairman and Chief Executive Richard Adkerson said.
The company said it is evaluating future growth opportunities and is positioned for increasing cash returns to shareholders.
With Copper at highs and Gras running now at 100%…..what will drive FCX share price higher from here? Investors know special dividends and possibly share buybacks are in order for a few years at least and company basically debt free yet share price stuck. I guess copper running beyond 5 bucks is what will be needed…..or takeover….
Copper continues to soar and CIBC says copper price to hit $5.25 per pound by year end or before end of Q1 2022. Time to load up copper plays especially this one that is highly leveraged with very few shares of stock available. Expect price to rocket to dramatic percentage gains soon.
What happens when the world’s key metal exchange has no metal?
October 20, 2021 | 9:01 am
Intelligence Markets Europe Copper
The dramatic drop in stockpiles that began in August and accelerated this month has sent the nearest LME contracts spiking to record premiums over copper for later delivery. That’s particularly painful for copper fabricators — companies that turn basic metal into things like wires, plates and tubes, and who tend to sell LME futures to hedge their price exposure.
Only a small fraction of the world’s copper ever enters an LME warehouse, and copper users tend to have long-term contracts with producers and traders rather than seeking supplies from the exchange. Nonetheless, the fact that exchange stocks are so low — and not just on the LME — shows that the market’s buffer has worn dangerously thin.
Commerical parties are mad as hornets about Trafigura scamming the cancelled warrant /off-warrant reporting system on the LME to jazz prices and line their own pockets.
Good magic act that Trafigura pulled as they engineer essentially phony withdrawals from the LME warehouse system (which is the illusion of the off-warrant) process. Not reporting it timely, is gaming the system.
But real industrial users.....................DON'T get their copper from future exchanges.
They call copper miners !!!!
And miners have plenty of copper. Loaded. And so is European-based smelter Aurubis.
LME is just trying to retain it's physical backed standard they've operated on since the LME was created in
1877, when they finally decide to put their foot down.
Swiss-based Trafigura got a little too close to the flame, and now they will burn. Don't cry for them. They made billions aggressively rigging the copper market past three weeks. Neat trick. Marc Rich would be proud.
Copper Dropped to 4.5090 We should get up to 4.57 or better tomorrow. FCX will bounce north. Don't look at all the Nay Sayers about Copper made up stories. Copper going again because as we all will see just made up lies about Copper supplys. Just watch and see.
Earning not out yet as far as I know, but in summary analysts estimate that Freeport-McMoRan will likely report an Earnings Per Share (EPS) of $0.82.
So there's the bar.
I agree with them paying down the debt before increasing the dividend. They were paying 4.5% on the $7B debt they paid down, which could be switched to higher dividend payments, which would be an additional 0.56% per year.
bofa says 0% returns for market for next 10 years. how can this crack fueled market return 0% for the next 10 years? would be quite a trick. this must mean stupendous drop followed by painfully slow recovery?
Bank of america said to pick your stocks carefully and focus on dividend yield...time to be smart and expect 10% returns rather then the short term bonanza.....young investors will freak out because they have no patience or self controll... just impulse trading.....back to mario brothers
And now they post....EPS $0.89 beats $0.81 Est. Sales $6.08B misses %6.18B Estimate
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