Goldman Sachs Group, Inc.: Trade storm hits copper mining stocks, Ero Copper (ERO.US) and other individual stocks expected to rebound against the trend.

Goldman Sachs Group, Inc. recently released a research report on the global copper market. The bank stated that copper mining stocks have been hit hard in the recent market sell-off, with an average cumulative drop of 19% over the past two trading days. Copper demand is closely related to economic growth, and copper has always been favored by investors. Currently, it faces technical trading risks, leading to significant impacts in market volatility. Following the recent sell-off, Goldman Sachs Group, Inc. evaluated the valuation of the stocks it covers and noted that the implied copper price ranges from $8,525 to $10,018 per ton. This forecast is based on a 1x net asset value (NAV), compared to Goldman Sachs Group, Inc.'s long-term copper price forecast of $10,000 per ton with a marginal cost of around $8,900 per ton. In a pressure scenario, if the market prices related stocks based on a copper price of $8,500 per ton and a 1x net asset value, those stocks will face downside risks. Goldman Sachs Group, Inc. sees this scenario as unsustainable because the copper price is below the marginal cost, unable to stimulate the necessary copper supply projects, and the industry's trading prices have always been higher than net asset value (scarcity premium). In this pressure scenario, Goldman Sachs Group, Inc. expects related stocks to have varying declines ranging from 26% to 72%. The impact of recent trade tensions on the macro environment and economic growth remains unclear, and investors continue to adjust their positions in a risk environment. Goldman Sachs Group, Inc. favors copper mining stocks with short-term catalysts and more attractive valuations, including First Quantum, Ero Copper (ERO.US), Grupo Mexico, and Lundin.