Copper Stock Investment Manual: Master These Key Points, Copper Concept Stocks Still Have Opportunities in 2024

Recently, copper assets have performed remarkably well. In less than two months, Freeport-McMoRan (FCX), the global leader in copper mining, has risen nearly 30%, while international copper prices have also increased by over 17%. What are the driving forces behind this rally? How should copper stock investors view this sector?

Why do copper stocks and copper prices move in sync?

Copper is mined and used across three stages: extraction, smelting, and processing. Companies at different points in the supply chain have varying sensitivities to copper price fluctuations, which explains why some copper stocks are highly correlated with copper prices, while others are less affected.

The most direct beneficiaries of rising copper prices are upstream companies. Copper mining companies, whose main product is copper, benefit as higher copper prices expand their profit margins. Comparing copper mining ETFs (COPX) with LME copper price trends reveals that they almost move in perfect harmony—this is not coincidence but a reflection of fundamental factors.

In contrast, midstream smelting companies earn only processing fees and are less sensitive to copper price swings. Downstream processing firms, such as wire and cable manufacturers, often see copper as a cost item; rising copper prices can actually squeeze their profit margins.

Who is leading the global copper market? Who is driving this rally?

The top ten copper mining companies worldwide control the majority of production. Freeport-McMoRan, with a production of 17,440 thousand tons, is the top and is recognized as the purest copper stock. Glencore, BHP, Southern Copper, and others are also key players.

Among these, Freeport-McMoRan has the highest business concentration in copper, making its stock performance most sensitive to copper price movements. Diversified mining giants like BHP, while producing significant volumes, have copper as only a part of their portfolio, making their copper exposure less pure.

Why is 2024 a promising year for copper stocks?

Supply-side pressure. Over the past decade, global copper mining capital expenditure has been low, with limited new capacity coming online. The addition of new copper supply in 2024 is expected to be quite limited.

Demand-side strength. Under carbon neutrality goals, investments in power and grid infrastructure are massive. The global AI wave is driving a surge in demand for copper cables for computing infrastructure. These are long-term structural demands that are unlikely to reverse.

Economic cycle resonance. The global economy is in a transition phase, with emerging growth drivers clearly boosting copper demand.

Considering these factors, the outlook for copper stocks remains relatively strong.

Taiwan and international copper stock allocations

In the international market, FCX is the top choice due to its specialization. While Glencore and BHP have smaller copper segments, as top-tier global mining groups, they excel in resource allocation and risk management.

Taiwanese copper stocks are mainly focused on downstream sectors. First Copper (2009) specializes in copper foil production, supplying semiconductors, automotive, and electronics industries. Hua Rong (1608) is one of Taiwan’s three major wire and cable manufacturers. For these companies, rising copper prices increase cost pressures, so attention should be paid to their pricing power.

Entry timing and risk warnings

From a short-term perspective, copper stocks have already gained significantly, and technical indicators suggest a potential correction. In the medium term, supply and demand fundamentals support a sustained strong copper price.

The key risk is Federal Reserve policies. If interest rate hikes continue or high rates persist in 2024, global demand could be suppressed, putting pressure on copper stocks. Investors should closely monitor economic data and central bank signals.

The recommended strategy is to wait for a pullback. After technical signals confirm a bottom, buying on dips can reduce risk. Also, control position sizes, as commodities like copper are sensitive to economic cycles and can be volatile.

Summary

The investment logic for copper stocks is clear—capitalize on the global economic cycle: participate during upswings, remain cautious during downturns. The supply-demand outlook for 2024 is favorable, but valuations have already been priced in. Strategic allocation rather than chasing highs is wiser. Whether investing in individual stocks or via ETFs, always prioritize macroeconomic cycle analysis.