NEW YORK, NY--(Marketwire - Oct 23, 2012) - After surging on the announcement of Quantitative Easing 3 copper prices have fallen sharply, hitting a 6-week low last Friday, on concerns regarding China's failing economy. The major slowdown in China, who is responsible for roughly 40 percent of the world's copper use, has had a major impact on copper prices in 2012. Five Star Equities examines the outlook on the Copper Industry stocks and provides equity research on Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) and Southern Copper Corp. (NYSE: SCCO).
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The Wall Street Journal last week reported that an adviser to the People's Bank of China, Song Guoqing, stated that new measures to stimulate the economy are unlikely to come from China's central bank as banks in the nation are showing a willingness to lend.
"We had a big rally in base metal prices going into September on anticipation of QE3, the implementation of QE3 and also the raft of policy initiatives announced in China and measures taken by the ECB," said Nic Brown, head of commodities research at Natixis. "Just don't expect this surge in prices to be sustainable. It was not a real reflection of improved demand in China and it is no surprise to us that base metal prices have come off quite significantly."
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FCX is the world's largest publicly traded copper producer and has a dynamic portfolio of operating, expansion and growth projects in the copper industry. The company offers an annual dividend of $1.25 per share for a yield of 3.04 percent. The company reported second quarter 2012 sales of copper totaled 927 million pounds, compared to 1 billion pounds in the second quarter 2011.
Southern Copper is one of the largest integrated copper producers in the world and has the largest copper reserves of the industry. The company last week declared a third quarter dividend of $2.75 per share of common stock payable on November 21, 2012. According to Goldman the dividend exceeded expectations. The firm has given Southern Copper a "neutral" rating.
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