U.S. Copper Tariff Drives Prices Up 50% Boosting FCX.US

The recent announcement of a 50% import tariff on copper by the U.S. administration has caused significant market disruptions, leading to a surge in copper prices on the COMEX, reaching historical highs. This unexpected move is part of a broader trade strategy aimed at protecting domestic copper producers by increasing the cost of imported copper.

In response to this development, Morgan Stanley has released a research report recommending Freeport-McMoRan Copper & Gold (FCX.US) as a safe haven within the copper industry. The report highlights FCX.US's strong operational performance, cost advantages, and significant U.S. business operations as key factors that position the company to navigate the challenges posed by the new tariff.

According to Morgan Stanley, the current premium of COMEX copper prices over LME prices could bring substantial benefits to FCX.US. The company's U.S. assets enjoy tax and royalty exemptions, which could result in an annual EBITDA and operating cash flow increase of 135 million dollars for every 0.1 dollar per pound increase in the COMEX-LME spread. This advantage is primarily due to the favorable tax and royalty policies applied to its U.S. assets.

Morgan Stanley also notes that FCX.US's prudent capital expenditure strategy and cautious project approval process are likely to continue the trend of increasing shareholder returns, following the 55 million dollars stock buyback in the first quarter. The firm has raised its target price for FCX.US from 42 dollars to 56 dollars, reflecting the strengthening of commodity prices and the easing of economic recession risks.

In addition to FCX.US, Morgan Stanley also recommends Teck Resources (TECK.US) and Ivanhoe Electric (IE.US) as attractive investment opportunities. Teck Resources is praised for its QB2 project's operational performance, while Ivanhoe Electric, despite being in its early development stages, is noted for its focus on U.S. copper mining operations.

Other analysts have also weighed in on the impact of the tariff. It is noted that the companies most sensitive to COMEX copper price changes are Freeport-McMoRan Copper & Gold, with an estimated 36% of its 2025 revenue coming from U.S. copper operations, and Southern Copper Corporation, with an estimated 40% of its 2025 revenue from the same source. Hudbay Minerals, while currently having no U.S. copper revenue, is expected to see a significant increase in its U.S. copper operations revenue share, reaching 30% by 2030, following the completion of its Copper World project in Arizona.