What happened

Shares of miner Freeport-McMoRan (FCX 1.89%) declined by nearly 4% by midday today. The move comes on the back of a few negative pieces of news. First, in a bad day for commodities in general -- cyclical commodities like oil, nickel, and aluminum prices declined -- Freeport-McMoRan's key mineral, copper, fell a few percentage points to about $3.68 per pound.

Second, Scotiabank analyst Orest Wowkodaw downgraded the stock to sector perform from outperform, citing valuation and highlighting the downside risk to the price of copper coming from a slowing economy.

So what

The analyst downgrade highlights the near-term risk to the stock. Of course, there's no shortage of macroeconomic risks around right now, whether it's from the ongoing conflict in Ukraine, rising interest rates, lockdowns in China, or the pressure on the European industrial sector from sanctions applied on Russian energy. As such, Wowkodaw's downgrade is a reminder that demand for an industrial metal like copper depends on growth, particularly as it's widely used across the economy. 

Still, the issues discussed above are either cyclical or possibly proving temporary. On the other hand, the factors favoring a higher price of copper -- ones that Freeport-McMoRan's CEO Richard Adkerson has articulated -- are structural in nature. 

For example, the marginal increase in long-term demand for copper is coming from its use in electric vehicles, renewable energy, and the general trend toward electrification in the economy. At the same time, supply is being constrained by the difficulty of acquiring permits.

Now what

Investors in commodities are used to wild price swings, which will continue to be that way. So there's no doubt Freeport-McMoRan faces near-term risk, but the long-term case for copper and the stock remains in place.