Copper Price Surge Brings Laughter to Poongsan

[Asia Economy Reporter Minji Lee] The stock price of Poongsan, a company engaged in the business related to refined copper (high-purity copper after electrolysis), is fluctuating due to the soaring copper prices. As COVID-19 vaccination accelerates economic recovery policies in major countries, demand for non-ferrous metals centered on copper is expected to expand further.

According to the Korea Exchange on the 14th, as of 9:45 a.m., Poongsan's stock price, which produces copper alloy using refined copper as raw material, was traded at 30,350 KRW, up 1% from the previous session. It has risen about 8% since the beginning of this year. Copper prices have surged to the $8,000 level for the first time in eight years (since January 2013), raising expectations for improved performance.

According to prices announced by the London Metal Exchange (LME), the spot price of copper is around $7,980 per ton. Copper prices, which had fallen to $4,160 due to the impact of COVID-19, have surged about 88% in less than a year.

The rise in copper prices is supported by an imbalance between supply and demand. While demand for copper is concentrated due to economic stimulus measures, concerns over supply disruptions have increased due to the resurgence of COVID-19 and worker protests in copper concentrate producing countries such as Chile and Peru. Furthermore, expectations for U.S. President-elect Joe Biden's Green New Deal policy are stimulating demand for non-ferrous metals such as copper and nickel. So-hyun Kim, a researcher at Daishin Securities, explained, "The Biden administration plans to invest $2 trillion in eco-friendly infrastructure, which will expand demand related to renewable energy within non-ferrous metals."

Poongsan's stock price rally is expected to continue this year. Typically, Poongsan's stock price moves in tandem with refined copper prices, as higher selling prices lead to improved earnings. From the fourth quarter of last year, sales volume of high value-added copper alloy products such as sheets and plates has been increasing with the recovery of the automotive industry, supporting the trend of earnings improvement.

Jong-hyung Lee, a researcher at Kiwoom Securities, explained, "While good performance is expected from the copper alloy division, concerns over firearm regulations by the Biden administration in the defense business division are stimulating demand for firearms and ammunition hoarding in the U.S., so strong earnings are expected in the first half of this year." Following this trend, the target stock price has also been raised. Poongsan's target price, previously set at 30,000 to 30,400 KRW, has been adjusted to 38,000 to 39,000 KRW this month.