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Ill Wind Blowing On Copper, Aluminum Producers

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Ill Wind Blowing On Copper, Aluminum Producers

A market glut of both aluminum and copper bode ill for producers in the sector, an analyst said Tuesday.

"It will get worse before it gets better," said Morgan Stanley's Piyush Sood, who cut his targets an average of 20 percent on seven metals and mining companies Tuesday.

Among them, Sood downgraded Century Aluminum Co (NASDAQ: CENX) to Underweight and lowered his target 33 percent to $12.

The analyst also lowered his rating on copper producer Ivanhoe Mines Ltd. (TSE: IVN) to Equal-Weight, with a target haircut of 50 percent to $2.

Aluminum exports from China are up 158 percent, "posing a downside risk to global pricing," Sood said.

As a low-cost producer of aluminum, Constellium NV (NYSE: CSTM) "looks best-placed in this environment," Sood said, maintaining a target of $28 and Overweight rating on the stock.

Copper prices meanwhile are plagued by inventories that have risen 140 percent since June.

Dividend cuts at copper miners Freeport-McMoRan Inc (NYSE: FCX) and Teck Resources Ltd (USA) (NYSE: TCK) look increasingly likely as the companies burn cash to stay warm, according to Sood.

Sood reduced his target 20 percent on Freeport-McMorRan to $20, maintaining an Equal-Weight rating. Teck's target stayed at $16, and also at Equal-Weight.

Sood maintained Equal-Weight ratings on both Alcoa Inc (NYSE: AA) and Noranda Aluminum Holding Corporation (NYSE: NOR).

But Alcoa got a 6 percent target cut to $17 and Noranda's price objective fell 9 percent to $2.50, in Sood's book.

Latest Ratings for CENX

DateFirmActionFromTo
Jun 2020BMO CapitalDowngradesOutperformMarket Perform
Mar 2020B. Riley FBRDowngradesBuyNeutral
Feb 2020B. Riley FBRMaintainsBuy

View More Analyst Ratings for CENX
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