Trump’s flurry of trade war updates this week included a 50% tariff on copper.
The news sent copper prices soaring to records on Tuesday.
Morgan Stanley flagged two public companies that are set to benefit from new duties on copper.
An unexpected update on the trade war from President Donald Trump sent copper prices soaring this week, and there are some specific stocks investors should look to benefit from new tariffs on the metal.
On July 8, Trump told reporters that he would impose a new 50% tariff on all copper imports. While he did not reveal an exact date for the new duties, Commerce Secretary Howard Lutnick later stated that it would kick in later in July or August.
Even as an offhand comment light on specifics, Trump’s words sent copper prices soaring. Copper soared to all-time highs on Tuesday, rising as much as 17% for its biggest single-day rally ever.
“Rising copper prices could significantly affect copper-intensive sectors such as building construction, equipment manufacturing, electric vehicles, and electronic products. The widespread use of copper might also fuel inflation concerns,” LPL Financial’s Adam Turnquist said on Wednesday.
For investors eyeing the commodity’s surge and wondering how to play it in the stock market, Morgan Stanley analyst Carlos de Alba said in a recent note that two companies in particular are set to benefit from new tariffs.
de Alba said that he sees Freeport-McMoRan as the best-positioned company due to its strong connections to Commodity Exchange (COMEX) options and futures market. The analyst thinks shares will “outperform peers given they are the largest beneficiary of these potential tariff with ~1/3rd of their copper sales coming from US-based production and going to US-based customers on COMEX linked contracts.”
In addition, he highlighted Southern Copper Corporation as another likely beneficiary, as 40% of its contracts are linked to COMEX, with 30% from clients in Mexico and 10% from the US.
“[T]he company should see a short-term uplift to profitability on the Mexico COMEX contracts, where it will benefit from higher tariff pricing without needing to pay a tariff,” the note said.
de Alba maintains am Overweight rating on Freeport stock and an Equal Weight rating on Southern Copper.
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