Freeport CEO Says Trade Angst Is Deterring Investors, M&A

(Bloomberg) -- The world’s biggest publicly traded copper producer said trade frictions are spooking investors and deterring companies from pursuing mergers and acquisitions.

Freeport-McMoRan Inc. Chief Executive Officer Richard Adkerson said there’s “tremendous” uncertainty because of the trade spat between the U.S. and China, the two largest consumers of the metal. Concerns over the outlook for the Chinese economy and possible fallout from the trade discord have been weighing on investor views of copper, even as supplies tighten and demand remains resilient, he said.

“We have this disconnect between the physical marketplace for copper and investors’ perceptions of the future,” Adkerson said in an interview at an industry conference in Hollywood, Florida. “I say we’re at a fork in the road: either there’s going to be a significant dislocation in China, in the global economy or else copper prices are going to rise in the near term.”

Copper futures in New York fell 20 percent last year amid fears that trade disagreements between the world’s two biggest economies would crimp demand. Adkerson said that for the longer term he feels “very good’ about copper because of the outlook for limited supply and increasing consumption globally, especially with alternative uses of copper such as in electric vehicles.

For now, “there’s tremendous uncertainty in the macroeconomic situation, because of trade concerns of investors about the impact on China and other factors impacting China, which is so key to copper consumption,” Adkerson said. “I think any big deal will face a challenge right now.”

©2019 Bloomberg L.P.