Freeport McMoRan: Metal prices depend on Chinese demand

In their earnings release yesterday,Caterpillar (CAT) offered insight into the demand mining companies had for their heavy equipment. After reporting that results beat estimates, the company said that gold miners were "cautiously optimistic," but that copper miners are showing "significant caution" and would need to see stabilization in prices at or above current levels before they began to invest more. Caterpillar shares rallied sharply, but what are their customers seeing?

Earnings from leading mining company Freeport McMoRan (FCX) offer insight into metals prices and how miners are adjusted to the macro environment. The company reported profits of $588 million, or $1.38 per share, double the average analyst estimate. The mining giant increased production of copper and gold to offset falling unit prices. Some of that production comes from the Tenke Fungurume project in the Democratic Republic of Congo, a prized possession of Freeport's that just came online after extensive investment. Operating cash flow during the quarter was $1.2 billion, part of which allowed Freeport to redeem $340 million in debt prematurely.