Copper prices seen falling in 2018, Morgan Stanley sees worst impact for Kaz Minerals

Copper miner Kaz Minerals faces the greatest potential impact from a predicted fall in prices of the commodity, warned Morgan Stanley as it downgraded the stock to ‘underweight’ from ‘equal-weight’ after a recent strong performance.

While the company’s rating was downgraded, its 12-month target price was hiked to 480p from its previous 360p.

According to the US investment bank, Kaz’s risk-reward has reversed as the supply of copper increases in the market.

“With the greenfield projects now almost fully commissioned, the operational derisking is complete and the copper price will become the main equity driver,” Morgan Stanley said.

“Our commodities team sees weakness in the copper price into the next year as 945kt of additional supply enters the market.”

The mining company’s target price of 480p implies 33% downside from its current share price, the largest figure in its copper coverage.

“As the most financially levered play within our coverage, we believe it will have an outsized impact on Kaz. We estimate that every 10% change in copper price moves the equity by 25-30%.”

Earlier this month Kaz appointed a new CFO in John Hadfield, who will take over the position in the new year.

The firm’s share price was up 2.60% as of 13:41 BST despite the downgrade and the FTSE 250 trading lower.