Weak copper price belies 'strikingly tight' physical market, Freeport CEO says

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Copper futures that have fallen nearly 30% from a peak in March do not reflect a "strikingly tight" physical market for the metal, Freeport McMoRan (NYSE:FCX) CEO Richard Adkerson said Thursday.

The decline in copper prices reflects investor concerns about the global economy, weak data from China, the European energy crisis and a strong dollar, so it is "striking how negative financial markets feel about this market and yet the physical market is so tight," Adkerson said during today's earnings conference call after the company reported slightly better than expected Q3 results.

"We're not seeing customers scaling back orders. Customers are really fighting to get products," Adkerson said, according to Bloomberg.

The CEO reiterated his concerns that the pricing environment will defer new copper projects and mine expansions just as the world's transition to electrification requires a massive amount of the metal.

Front-month copper (HG1:COM) on the London Metal Exchange settled 2.2% higher Thursday to $7,549/metric ton, trimming its YTD loss to 22%; Comex front-month copper closed up 2.7% to $3.45/lb, also down 22% YTD.

ETFs: (COPX), (CPER), (JJC), (JJCTF)

Freeport McMoRan (FCX) shares surged nearly 8% before settling for a +2.7% gain; the stock is "strikingly cheap," trading at just 4x base adjusted EBITDA targets, Stone Fox Capital writes in an analysis newly posted on Seeking Alpha.