What happened

Shares of copper miner Freeport-McMoRan (NYSE:FCX) rose an impressive 31% in April according to data from S&P Global Market Intelligence. That was a welcome relief, but not nearly enough to offset the declines seen so far in 2020. At the end of April the stock was still down by a third from the start of the year. And it doesn't look as if things are going to get better for the company's business anytime soon.

So what

Freeport-McMoRan is one of the world's largest copper miners. This is an industrial metal that gets used in everything from electrical wires to technology gadgets. However, the price of the metal is highly sensitive to economic activity. So when the efforts to contain COVID-19 had the world frightened that economies around the globe would be pushed into recession, the stock plummeted. 

A large collection of copper pipes sitting on their ends

Image source: Getty Images.

In April, investors seemed to rethink the depth of their negative view about the state of the world and, thus, Freeport-McMoRan's stock. Just about everything rallied. However, the underlying economic trends haven't changed. In fact, in late April, Freeport-McMoRan reported earnings that were anything but reassuring. The company lost $0.34 per share in the first quarter and announced a material retrenching of its business. The effort to adjust to the current difficult environment will include an 18% reduction in operating costs, a 30% reduction in capital spending, a 20% drop in exploration spending, and, perhaps most notably, a 15% reduction in production volumes. The hope is that the miner will use just a little bit more cash than it generates through the rest of the year. This is not the backdrop for strong financial results. 

Now what

There's no question that investors switched from a negative mood in March to a positive one in April. However, that doesn't really change the operating environment that Freeport-McMoRan has to work within. Simply put, it's still tough out there, and since the world is only just starting to emerge from the efforts to contain COVID-19, things are going to remain difficult for at least a little while longer. Don't get too excited about Freeport-McMoRan's April rally; it still has a lot of hard work ahead of it.