During this recent prolonged commodity market downturn, commodity players had tightened their capex spending, but eventually, they need to start increasing their capital spending. So, EP&C market challenges seem to be subsiding. Fluor’s backlog is growing for the first time since the downturn began. Electric cars and alternative energy are a few catalysts for the long-term demand for copper. So, in that case, why are we exiting the trade for Fluor. The reason is the trade tariff.
In general, during a robust global economic growth, commodity and EP&C markets enjoy the growth. However, during this economic growth period, the commodity market has decoupled, and it just started its recovery. Now, there are uncertainties due to the trade war, and it might be a catalyst for the next global recession. Throughout this recent commodity market downturn, copper companies’ management were always upbeat about the long-term demand for copper and insist that copper fundamentals were strong. Recently, CEO of one of the largest copper companies mentioned that, while he is upbeat about the long-term demand for copper, the company is prepared to cut production if required.
We are a bit cautious about recent trade tariff talks and decided to sell FLR.
To read reasons behind this buy click here
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