Freeport-McMoRan Copper & Gold Inc. (FCX), Southern Copper Corp (SCCO): China’s Slowdown Is Hurting Copper

Additionally I would encourage investors to avoid the entire copper sector including Southern Copper Corp (NYSE:SCCO), as the company has a similarly high correlation to copper prices.

Southern Copper Corp (NYSE:SCCO), as its name would imply, focuses almost entirely on the production of copper through its South American operations. While the company does produce a variety of other industrial metals, its revenues will be in direct correlation with copper prices and therefore should trade in tandem with copper futures.

However, the company isn’t going anywhere. Current assets, largely cash, drastically outweigh current liabilities. The majority of the company’s liabilities are in the form of long term debt which  gives investors cash flow certainty over the shorter term. While analysts are expecting negative 15.9% growth this year, it shouldn’t be long before it rebounds.

Foolish wrap up

Due to China’s economic slowdown, it seems likely copper prices will continue to fall in the near term. So Investors may want to avoid companies with high exposure to the underlying price of copper. If you are looking to hedge your positions in either Freeport or Southern Copper Corp (NYSE:SCCO), you could do so by shorting the copper ETN mentioned above.

The article China’s Slowdown Is Hurting Copper originally appeared on Fool.com.

Nathaniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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