Freeport-McMoRan to Offer Up Energy Assets: Will It Be Enough?

(Continued from Prior Part)

Previously in this series, we reviewed some recent economic indicators out of the Eurozone. When it comes to commodities, however, China (EWH) (EWT) is the key driver. The country accounts for more than 42% of global copper consumption. In this part of the series, we’ll analyze China’s June PMI (purchasing managers’ index).

PMI data are released on a monthly basis by Markit. On June 23, the flash PMI was released. The final PMI figures will be released on July 1. For investors, flash PMI figures hold a lot of importance because they provide an early insight into China’s manufacturing sector.

The above chart shows China’s manufacturing PMI. In June, the flash PMI came in at 49.6, a three-month high. However, the PMI has now been below 50 for four consecutive months. Figures below 50 are generally associated with a contraction in manufacturing activity.

According to Annabel Fiddes, an economist at Markit, the data were a “mixed bag.” The output seems to have stabilized, with the total new work picking up modestly. June, however, witnessed the sharpest workforce reduction among manufacturers in more than six years.

In May, China’s merchandise exports and imports fell. Lower Chinese exports signal weak global demand, while a fall in imports is associated with weakness in the Chinese economy.

Weakness in the Chinese economy negatively impacts companies including Turquoise Hill Resources (TRQ), Rio Tinto (RIO), and Buenaventura (BVN).

You can visit Market Realist’s Copper page to track recent developments in this industry.

Browse this series on Market Realist:

• Part 1 - Freeport-McMoRan Registers Energy Biz for Initial Public Offering
• Part 2 - Freeport-McMoRan Looks to Clear Debt Woes with Public Offering
• Part 3 - Is Freeport-McMoRan’s Energy Divestiture Good for Shareholders?