On Wednesday, RBC Capital Markets adjusted its stance on Antofagasta Plc (LON:ANTO:LN) (OTC: ANFGF), downgrading the mining company's stock rating from Sector Perform to Underperform. The firm maintained its price target for the stock at GBP 16.00.
The decision by RBC Capital's analysts comes as Antofagasta approaches a critical period of high capital expenditure for its Centinela second concentrator project. The analysts expressed concern about the timing of this peak spending phase, noting that a downturn in copper prices, potentially triggered by a trade war and tariffs introduced by the Trump administration, could significantly impact the company's financials.
The analysts highlighted the recent performance of copper on the COMEX, which has seen a 7% increase since the start of the year. However, RBC Capital suggests that this uptick may not be sustainable. They argue that the current demand for copper may have been artificially inflated as buyers rush to secure supplies before the imposition of tariffs, which could lead to a sharp decline in apparent demand thereafter.
RBC Capital's analysis indicates that short-term risks for Antofagasta are skewed to the downside. The firm points out that while the mining company's price target remains unchanged at 1600 pence, the downgrade reflects a cautious outlook on the copper market and Antofagasta's exposure to potential external shocks.
The downgrade serves as a cautionary note for investors, signaling potential challenges ahead for Antofagasta as it navigates through a significant investment phase against the backdrop of an uncertain global trade environment.
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