JPM-Glencore plc H125 preview 2025 copper guidance implies-20250730

We update our forecasts to incorporate Q2’25 production (JPM First Take: link),which was weak vs JPMe & company compiled consensus. The key items were:1) GLEN raised long-term Marketing EBIT guidance to $2.2-$3.5bn ($2.2-$3.2bnprev) and guided H1’25 EBIT at $1.35bn, in line vs consensus. 2) GLEN guidesto 506-546kt copper output in H2’25, which at the low end of the range is ~50%higher vs H1’25. Given GLEN’s disappointing recent history in meeting copperguidance, we expect investors will assign a risk weighting; JPM’s 486kt forecastfor H2’25 is below guidance. We reduce 2025/26E EBITDA by -3%/-2% to $12.3/$15.6bn, -5%/+2% vs BBG consensus ($12.9/$15.3bn). We calculate GLENtrades on EV/EBITDA 5.7x/4.8x 2025/26E and 5%/8% FCF yield. We areOverweight with an unchanged PT of £3.60/sh (ZAR 86/sh).

With direct relevance to Glencore and other global copper miners, we notethat the US has exempted refined copper imports from tariffs. We believe thisintroduces short-term downside risk to copper prices; the US COMEXcopper price is trading >15% lower at the time of writing (20.30 GMT).

•New newsflow - negative for copper prices & Miners: of significantrelevance to GLEN and global copper equities, the US administration hasannounced (after UK market close) that the US will impose a 50% tariff onsemi-finsihed copper imports. However, refined copper imports are exemptfrom tariffs. This removes the arbitrage between COMEX and LME refinedcopper. COMEX refined copper prices immediately fell >20% and US listedcopper miners fell sharply (Freeport >10%). Our initial assessment is thisunexpected policy outcome will also prove negative in the short-term for LMEcopper prices and European copper equities, since refined copper inventorythat has been stockpiled in the US will now transfer back to non-US exchanges,thereby depressing prices. We expect Glencore to trade lower at tomorrow’sopen in common with other UK and European copper miners; JPM isOverweight Antofagasta and Rio Tinto, Neutral First Quantum andLundin Mining, Underweight Boliden.