What happened

Shares in copper miner Freeport-McMoRan (FCX -0.20%) fell 25.1% in June according to data provided by S&P Global Market Intelligence. The move comes amid a selloff in the price of copper and negative investor sentiment about the future direction of the economy in light of interest rate hikes by the Federal Reserve and other central banks.

After starting the month with a price of around $4.30 per pound, the price of copper fell sharply to end the month at around $3.60 per pound, down 16.2%.

So what

It’s a big decision, but long-term investors shouldn’t lose sight of the long-term picture here. For example, the current price is still significantly higher than the $2.60 per pound that copper entered in 2019 (before COVID-19), and it is also much higher than the average of the last decade.

Additionally, much of the sell-off in copper is due to speculative flows in response to rising rates – demand for copper certainly hasn’t fallen 16.2% in the past month.

If the economy emerges from this difficult period in moderate growth mode, traditional demand for copper (construction, consumer goods, machinery, electrical networks) will be sustained. In addition, there is the long-term demand driver of its use in electric vehicles, renewable energy and the long-term trend towards electrification of the economy.

Meanwhile, Freeport management believes global copper supply will be constrained by political uncertainty in countries like Chile and Peru and the general difficulty of acquiring permits. On the other hand, Freeport has major expansion plans in countries like Indonesia and Arizona.

Now what

Along with copper prices and global growth prospects, investors in copper miner Freeport have a few things to watch in the company’s upcoming results. On the first quarter earnings call, management disappointed the market by slightly lowering its 2022 sales volume forecast and raising its cost assumptions due to rising raw material costs. Investors will want to see the former maintained, while its costs may decline in the future as energy prices fall.