Why China’s January Trade Data Will Be Crucial for Freeport
What Could Drive Freeport-McMoRan's February Performance?
China’s January trade data
Investors in the metals and mining space closely watch Chinese economic data. As China is the world’s single largest consumer of most commodities including copper, news flow from the country naturally impacts material stocks including Freeport. The month has already started on a weak note and China’s official manufacturing PMI (purchasing managers’ index) came in at 49.4, the lowest since August 2012.
February
We don’t get a lot of data points from China (FXI) in the first two months of the calendar year due to the Chinese new year holidays. However, the January trade data is expected to be released on February 15. So what’s so special about China’s February trade data?
China is not self-sufficient in its copper requirements, so it imports the metal in large quantities. China is the biggest market for miners like Rio Tinto (RIO) and BHP Billiton (BHP). RIO is also developing the Oyo Tolgoi (TRQ) mine in Mongolia to cater to the Chinese copper demand.
December trade data
The December trade data showed that Chinese copper exports rose sharply across all three product categories: refined, concentrate, and scrap. This raised hopes that the country’s copper demand is probably not as weak as many analysts were projecting.
The January trade data will be crucial for Freeport investors in two ways. First, China’s overall exports and imports will provide insight into the state of the world’s second-largest economy. Second, China’s copper imports will tell us whether copper demand is indeed strong or whether the spike in December copper imports was more of a one-time blip. Better-than-expected Chinese copper imports might have a positive impact on copper prices. However, if China’s copper imports dip significantly from last month’s level, it could spoil market sentiments.
Another crucial event that Freeport-McMoRan (FCX) investors should follow in February is the company’s ongoing talks with the Indonesian government. In the next part, we’ll see how the outcome might impact Freeport.
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