Shares in copper miner Freeport-McMoRan(NYSE: FCX) were up by around 10% midday today. This builds on an already impressive 16% gain in October.
The move today comes as the mining stock's bulls got to hear exactly what they wanted from China. According to a Reuters article, official sources are declaring that China will make "substantial changes" to zero-COVID policies in due course.
That matters because the current policy has been responsible for curtailing growth as facilities are shut down in order to control COVID-19 outbreaks.
Ultimately, that's good news for copper, as China is responsible for 54% of global copper demand.
The news from China sent the price of copper sharply higher to $3.70 per pound from around $3.45 per pound yesterday. To put that move into context, Freeport-McMoRan's management argues that a $0.10 move in the price of copper will create a $425 million movement in its earnings before interest, taxation, depreciation, and amortization (EBITDA) on average in 2023/2024.
There's no guarantee the copper price rise will stick, and there's no guarantee China will change its policy. Still, the news out of China is a step in the right direction. It will encourage a wider reopening in the Chinese economy and allow purchasing managers to buy inventory in the knowledge that less Draconian measures are about to be imposed. In a globally integrated economy, what's good for China is often good for the rest of the globe, and that's certainly good for copper demand.
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