Goldman Sachs Sees Copper Imports Frontrunning Tariffs As FCX Positions To Benefit
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 12 2025
0mins
Should l Buy FCX?
Source: Benzinga
Copper Import Surge Forecast: Goldman Sachs predicts a significant increase in U.S. copper imports, potentially rising by 50-100% due to expected tariffs from the Trump administration, which could lead to domestic inventories swelling to around 400,000 tons by Q3.
Freeport-McMoRan's Growth Potential: The largest U.S. copper producer, Freeport-McMoRan, may benefit from these developments, with plans for increased production and potential tax incentives if copper is designated as a critical mineral, despite higher domestic production costs.
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Analyst Views on FCX
Wall Street analysts forecast FCX stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for FCX is 52.40 USD with a low forecast of 44.00 USD and a high forecast of 68.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
14 Buy
1 Hold
0 Sell
Strong Buy
Current: 60.670
Low
44.00
Averages
52.40
High
68.00
Current: 60.670
Low
44.00
Averages
52.40
High
68.00
About FCX
Freeport-McMoRan Inc. is an international metals company focused on copper. The Company operates geographically diverse assets with significant proven and probable mineral reserves of copper, gold and molybdenum. The Company's segments include the Morenci and Cerro Verde copper mines, the Indonesia operations (including the Grasberg minerals district and PT-FI’s downstream processing facilities), the Rod & Refining operations and Atlantic Copper Smelting & Refining. Its operations include North America, South America and Indonesia. In North America, it manages seven copper operations: Morenci, Bagdad, Safford (including Lone Star), Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico, and two molybdenum mines: Henderson and Climax in Colorado. It also operates a copper smelter in Miami, Arizona. In South America, it manages two copper operations: Cerro Verde in Peru and El Abra in Chile. In addition to copper, the Grasberg minerals district also produces gold and silver.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Put Option Appeal: The current bid for the $51.00 put option is 72 cents, and if an investor sells-to-open this contract, they commit to buying the stock at $51.00, resulting in an effective cost basis of $50.28, which represents a 13% discount to the current price of $58.64, making it attractive for those looking to enter at a lower cost.
- Yield Potential Analysis: Should the put option expire worthless, it would yield a 1.41% return on cash commitment, or an annualized yield of 10.31%, referred to as YieldBoost, highlighting the investment's appeal under current market conditions.
- Call Option Returns: The $63.00 call option has a current bid of $2.90, and if an investor buys FCX shares at $58.64 and sells this call, they could achieve a total return of 12.38% if the stock is called away at expiration, providing an additional revenue opportunity.
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- Mining Stocks Surge: Gold prices increased by over 1% and silver prices jumped more than 6%, boosting mining stocks with Coeur Mining up over 6% and Freeport McMoRan up more than 5%, suggesting rising investor demand for precious metals amid inflation concerns.
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- Economic Data Focus: The market is closely watching upcoming employment and inflation data, with January nonfarm payrolls expected to rise by 69,000 and the unemployment rate to remain at 4.4%, as these figures will influence investor expectations regarding future monetary policy, potentially leading to market volatility.
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- Strategic Deal with MP Materials: The Defense Department struck a landmark deal with MP Materials, investing $400 million in preferred stock with rights to purchase additional shares, positioning the Pentagon as the largest single shareholder and further solidifying U.S. dominance in the rare earth mining sector.
- L3Harris and Defense Partnership: L3Harris announced a proposed partnership with the U.S. government, where the Pentagon will invest $1 billion in its rocket motor business, with plans for an IPO in the second half of 2026, allowing the Pentagon's investment to convert into common equity, enhancing the capital base of the defense industry.
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See More
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- Global Mineral Cooperation Agreement: The US and EU committed to a deal within 30 days to identify cooperation areas, stimulate demand, and diversify critical mineral supply, aiming to prevent supply chain disruptions and promote research and innovation, reflecting the strategic collaboration of three major economies in global mineral supply chains.
- Current Control of Critical Minerals: China controls 60% to 90% of the global critical mineral processing market, particularly in missile defense and energy infrastructure, which creates vulnerabilities for the US and its allies, compelling them to take action to ensure supply security.
- US Policy Shift: President Trump launched the $12 billion Project Vault to stockpile critical minerals, while Congress passed the Critical Mineral Dominance Act, marking a significant step in breaking China's control over mineral supply chains and expected to boost domestic mining and refining sectors.
- Surge in Copper Demand: Copper demand is projected to rise by 50% to 42 million metric tons by 2040, while supply is expected to decline by 7%, leading to a 10 million ton shortfall, particularly driven by emerging technologies like AI and electric vehicles, intensifying the demand for copper.
See More
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- Silver's Volatility: Silver rallied double digits in a single day before plummeting 37%, reflecting market uncertainty while also presenting short-term trading opportunities for agile investors.
- Optimized Investment Strategies: Investors are advised to utilize GLD and SLV ETFs for trading, as these instruments offer high liquidity and closely track metal prices, making them suitable for call spreads and short put strategies to mitigate risk and enhance returns.
- Shifting Market Funds: Funds are shifting from tech stocks to hard assets like metals and energy, with seasonal factors and high volatility creating a favorable trading environment, underscoring the importance of adopting prudent trading strategies in the current market landscape.
See More
FCX Options Contract Analysis and Investment Opportunities
- Put Option Appeal: The current bid for the $51.00 put option is 72 cents, and if an investor sells-to-open this contract, they commit to buying the stock at $51.00, resulting in an effective cost basis of $50.28, which represents a 13% discount to the current price of $58.64, making it attractive for those looking to enter at a lower cost.
- Yield Potential Analysis: Should the put option expire worthless, it would yield a 1.41% return on cash commitment, or an annualized yield of 10.31%, referred to as YieldBoost, highlighting the investment's appeal under current market conditions.
- Call Option Returns: The $63.00 call option has a current bid of $2.90, and if an investor buys FCX shares at $58.64 and sells this call, they could achieve a total return of 12.38% if the stock is called away at expiration, providing an additional revenue opportunity.
- Risk-Reward Tradeoff: With the $63.00 strike representing a 7% premium over the current stock price, there is a 57% chance that this call option may expire worthless, allowing investors to retain both their shares and the premium collected, thus enhancing investment flexibility.
See More
