Aurubis AG rose the most in more than three months after a Societe Generale analyst said the world’s largest copper smelter may raise prices for treatment and refining because of a processing-capacity squeeze.
Aurubis increased 4.8 percent to 42.12 euros at the close in Frankfurt, the biggest gain since April 9. That pared the stock’s decline this year to 22 percent, valuing the company at 1.89 billion euros ($2.49 million). Trading volume exceeded the three-month daily average by 40 percent.
“Rio Tinto Plc raised its full-year copper production forecast, which lead to positive market sentiment,” Amit Pansari, a Bangalore-based analyst at Societe Generale, said by phone. “We expect increasing copper mine supply, which is the main driver for the rise in treatment and refining charges in the midterm,” while Chinese processors are restraining expansions due to capital costs and a technology shift.
Earnings are likely to rebound 25 percent next year after a net-income drop of 16 percent in 2013 as working with scrap metal becomes more profitable and demand increases in Europe, said Pansari, who started coverage with a buy recommendation and a 12-month stock-price estimate of 48 euros a share.
Margins at copper companies have narrowed because of weakening European demand and slowing Chinese growth that cut prices. Hamburg-based Aurubis, which is second only to Chile’s Codelco in production of refined copper, said in May that fiscal second-quarter pretax operating profit was almost wiped out, declining to 1 million euros from 87 million euros a year earlier. Aurubis is scheduled to report nine-month figures on Aug. 13.