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Investing.com -- Morgan Stanley has revised its copper mining stock ratings, citing macroeconomic uncertainty, stretched valuations, and commodity-specific risks.
The firm downgraded Teck Resources (NYSE:TECK) and Freeport-McMoran to Equal-weight, and Southern Copper (NYSE:SCCO) and Nexa Resources (NYSE:NEXA) to Underweight, while upgrading Grupo México to Overweight.
“The copper equities under our coverage have outperformed LME copper price by 28pct. pts. since April 8th,” Morgan Stanley (NYSE:MS) wrote, adding that “risk-reward is less compelling” amid expected consolidation in copper prices.
The firm anticipates that LME copper will “face a period of consolidation or modest decline once US Section 232 import tariffs are in place and the ‘extra’ US front-loading demand fades.”
Morgan Stanley sees “some upside” for FCX given its exposure to COMEX copper and gold, but said there are “few positive catalysts in the near term.”
For SCCO, the stock’s recent rally has left it trading at a premium, with analysts warning that declining exposure to COMEX copper in 2026 could reduce realized prices.
In contrast, the firm views GMEX as the most attractive copper play, noting that “the discount to its SoP valuation will keep falling on reduced regulatory uncertainty in Mexico,” and that the company is unlikely to pursue large investments outside its core business following the delisting of its railway unit.
Nexa was downgraded amid a “less optimistic view on zinc prices” and operational issues. Morgan Stanley also flagged broader risks from “a potential sharp deceleration in global growth” tied to U.S. tariffs but said Chinese stimulus or earlier Fed rate cuts could lift commodity prices above its base case.