| Why China’s Slowdown Could Continue to Haunt Freeport in 2016 | |
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An Investor’s Guide to Freeport-McMoRan’s 2016 Outlook (Continued from Prior Part) China’s slowdown
In Part 2 of this series, we saw that China’s December manufacturing PMI (purchasing managers’ index) missed analyst expectations. Copper producers Freeport-McMoRan (FCX), Teck Resources (TCK), Southern Copper (SCCO), and Turquoise Hill Resources (TRQ) fell as China’s slowdown pushed copper prices to multiyear lows in 2015. In this part of the series, we’ll explore how the Chinese economy could play out in 2016.
Could 2016 be any better?
In 2015, the Chinese economy was expected to have grown at the slowest pace in almost 25 years. The economic growth outlook for 2016 looks no better and economic activity is set to cool off further. Although some of the Chinese economic indicators did improve in the second half of 2015, they were largely ignored by the markets.
China’s (FXI) real estate indicators started to improve in the middle of 2015. China’s building sales rose on a year-over-year basis in each month between April–November 2015. However, in the first 11 months of fiscal 2015, Chinese real estate development enterprises purchased 33.1% less land for future construction as compared to the corresponding period in the previous year. Also, the floor area under construction has been falling steadily, as shown in the graph above.
Lower construction activity
It’s important to note that copper demand depends on the actual construction activity rather than the building sales. The higher building sales are likely coming from the huge inventory buildup with the Chinese real estate enterprises. Chinese construction activity needs to improve to support the copper demand in that country.
In the next part, we’ll explore why China’s copper demand could deteriorate further in 2016.
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Freeport McMoRan Copper and Gold Inc.
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PRODUCER |
CODE : FCX |
ISIN : US35671D8570 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Freeport McMoran is a gold and copper producing company based in United states of america. Freeport McMoran produces gold, copper, cobalt, molybdenum and silver in Chile, in Congo Dem. Rep. of, in Indonesia and in Peru, develops copper in Peru, and holds various exploration projects in Chile. Its main assets in production are CANDELARIA, EL ABRA, CHINO - MILL, HENDERSON, MIAMI - ROM LEACH, MORENCI - MILL, OJOS DEL SALADO, MORENCI and MORENCI - ROM LEACH in Chile, GRASBERG, SIERRITA and BAGDAD in Indonesia, TENKE FUNGURUME and TYRONE in Congo Dem. Rep. of and CERRO VERDE in Peru, its main asset in development is SAFFORD in Peru and its main exploration properties are BAGDAD - ROM LEACH and CHINO - ROM LEACH in Peru and CERRO VERDE - MILL, CERRO VERDE - CRUSHED LEACH, CERRO VERDE - ROM LEACH, EL ABRA - ROM LEACH and CLIMAX in Chile. Freeport McMoran is listed in Germany and in United States of America. Its market capitalisation is US$ 72.0 billions as of today (€ 67.6 billions). Its stock quote reached its lowest recent point on March 06, 2020 at US$ 10.00, and its highest recent level on April 19, 2024 at US$ 49.70. Freeport McMoran has 1 448 000 000 shares outstanding. |