Citigroup: Copper prices will hit new highs, it's a rare opportunity to invest in copper giant Freeport-McMoRan Copper & Gold Inc.

Citigroup released a research report, upgrading the rating of Freeport-McMoRan Copper & Gold (FCX.US) from "Neutral" to "Buy". The analysts at the bank said that supply chain disruptions and favorable macroeconomic factors are expected to push copper prices to historic highs in the next 18 months. Citigroup currently predicts that by the first half of 2026, copper prices will reach $12,000 per ton. The basis for this prediction includes "unprecedented mine closures, strong market demand, and supportive macro trends" - such as the US interest rate cut policy and the weakening US dollar. Additionally, Citigroup pointed out that the recent market sell-off caused by the accident at the Grasberg mine in Indonesia has led to Freeport-McMoRan's valuation being lower than its peers, creating a "rare opportunity" for investors. Citigroup acknowledges that the recovery time for production capacity at the Grasberg mine may exceed official guidance. The bank's model assumes a nearly 50% decrease in production by 2026, but emphasizes that the mine's structure has not been compromised. Citigroup stated that market concerns about risks have been overly reflected in the discounted stock price: "Even if production is halted for two years, our calculated Net Asset Value (NAV) for the company would only decrease by approximately 15%", the analyst team led by Alexander Hacking wrote in the report. The report also mentioned that Freeport-McMoRan's business in the US has growth potential - improvements in production efficiency, coupled with potential tariff policies on refined copper imports, are expected to boost the company's profits. At the same time, Citigroup maintained a "Sell" rating on Southern Copper Corporation (SCCO.US) due to its high valuation; a "Buy" rating on First Quantum and Ivanhoe Mines; and a "Neutral" rating on Teck Resources (TECK.US). Citigroup's fundamental forecast suggests that the copper supply shortage will ease after 2026 as production increases at Grasberg, Kamoa-Kakula, and other major projects. Nevertheless, the bank remains optimistic about Freeport-McMoRan's performance because investor confidence in the company's recovery plan is strengthening, and its position as the world's largest publicly traded copper mining company is further solidified, with the company's share price expected to outperform the market.