Out Fox The $treet

Summary Freeport-McMoRan will struggle if copper prices head below $2.50/lb for an extended period. The company faces a large reduction in cash flow expectations from the lower copper prices. Freeport-McMoRan holding $16 sets the stock up for a potential bounce, but it appears unlikely to hold due to copper prices.    Despite some positive long-term expectations for the copper market, the current issues in China crushed the commodity over the last couple of months. Unfortunately, for Freeport-McMoRan (NYSE: FCX ) , the prospects of the company (see Freeport-McMoRan: Positive Prospects For Copper ) are all built on copper prices that aren't faring so well now.  Read the full article on Seeking Alpha.  Disclosure: Long FCX. Please read the disclaimer page for more details.

While signs existed last week that Freeport-McMoRan Copper & Gold ( NYSE: FCX     ) was close to a resolution in Indonesia, the stock is going to have a much harder time overcoming the plunging copper prices due to China. As with most commodities, China is the engine that drives demand and ultimately pricing of copper. In the last few years, the Asian power has grown to account for roughly 40% of copper demand worldwide. Freeport-McMoRan is a leading global mining company with interests in copper, gold, and oil. The miner has a mix of mines throughout North America, South America, the Democratic Republic of Congo, and Indonesia. The mix of commodities and geographic locations helps it overcome political issues in any particular country, but the one thing the company won't overcome is plunging copper prices due to weak demand in China. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details....

The ability of copper to maintain prices above $3/lb caught most Freeport-McMoRan Copper & Gold ( NYSE: FCX     ) investors off guard, including this one. Stubbornly high inventories at the London Metals Exchange, or LME, combined with subdued China demand for copper should've crushed the prices of the red metal used in all kinds of building materials from plumbing pipes to electrical wires. One key to investing is noticing when a thesis doesn't play out and attempting to understand and adjust to the reasons.   A prime reason for the stubbornly high price of copper could be investment demand in China, where people prefer to own hard assets versus cash in the distrusted banking system. Such investment moves wouldn't be listed in the inventories on the exchanges, but it could help support the price of copper. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

With questions regarding China's demand, most commodities collapsed in the last year but copper prices have held up relatively well. A couple of factors have contributed to the resilient prices of copper outside of the supply situation at the LME. For one, China's demand continues to grow at 10% per year while the country accounts for 40% of the global demand. The other is that new copper deposits haven't been found in decades. So while copper inventories in China and the LME have remained high over the last year, copper prices have maintained a strong stance above $3 per lb.One of the main reasons is that regardless of inventories, copper remains one of the most difficult commodities to mine and find new supplies. Read the full article here . Disclaimer: No positions mentioned. Please review the disclaimer page for more details.