S&P/ASX 200 Index (ASX: XJO) copper stocks, it turns out, aren't immune to the slowdown in Chinese factory and residential activity that's been knocking the stuffing out of iron ore prices in 2024.
Amid faltering Chinese commodity demand and the potential of a short-term copper oversupply, the price of the red metal has tumbled from highs above US$10,890 per tonne on 21 May to US$9,092 per tonne today.
While that's still above the US$8,487 per tonne a year ago, the 17% retrace in copper prices has been dragging on the previously high-flying ASX 200 copper stocks.
Here's what I mean.
Since 21 May, the ASX 200 has gained 1.9%.
Over this same period, shares in copper miner Sandfire Resources Ltd (ASX: SFR) have tumbled 17.2%, almost in line with the decline in copper prices.
As for dual-listed, Canadian-based Capstone Copper Corp (ASX: CSC), which only joined the ASX on 8 April, its share price is down 22.2% since 21 May.
And when you're looking at ASX 200 copper stocks, you can't ignore BHP Group Ltd (ASX: BHP).
While iron ore remains BHP's top revenue earner, copper comes in at number two… and growing.
In FY 2024, BHP's copper production increased by 9% to 1.87 million tonnes. The miner reported earnings before interest, taxes, depreciation and amortisation (EBITDA) from its copper sales of US$8.6 billion over the year, up 29% from FY 2023. This saw copper making up 29% of BHP's FY 2024 EBITDA.
With both iron ore and copper prices falling, the BHP share price is down 15.8% since May 21.
Are ASX 200 copper stocks poised for a rebound?
I believe that, in the longer term, today's prices will likely represent a very attractive entry point into all three of these ASX 200 copper stocks.
While a global slowdown could lead to copper supplies exceeding demand in the short term, the case for copper remains strong in the long term.
Copper is a vital component in electrical wiring and thus remains crucial in the world's energy transition. Demand for copper is also expected to grow amid the rapid global expansion of AI-enabled data centres.
As for what we may expect from copper prices in the year ahead, Goldman Sachs has pared back its 2025 forecast and now expects copper to trade for an average of US$10,100 per tonne next year.
Turning to the biggest ASX 200 copper stock, Tribeca portfolio manager Ben Cleary is supportive of BHP's expanding copper operations.
"BHP has still outperformed most copper equities over the past three months so arguably acquisitions using scrip have become even more accretive," he said (quoted by The Australian Financial Review).
"Anyone thinking beyond next week or month has the opportunity to take advantage of short-term market dislocations at the moment," Cleary added.
Wilson Asset Management's Leaders Fund portfolio manager, John Ayoub, has BHP shares on his watchlist, but he's not ready to pull the trigger yet.
According to Ayoub:
For us to become more positive on BHP, we'd need to see stabilisation of iron ore, and then you'll get the delta and performance from copper over the medium to longer term from the cash it will generate out of the iron ore business.
We're getting closer; I wouldn't say now is the time to go all in on it, but we're certainly approaching that period.
