Glencore Slumps to Record Low as Mining Losses Pick Up Speed

Top Stories That Are Moving Today's Markets
  • Anglo American reaches 15-year low, Antofagasta slumps 7.3%
  • Credit Suisse cuts price targets for diversified miners

The rout across metals and mining shares accelerated as evidence of China’s slowdown renewed investor worries and analysts said prices are heading lower.

Glencore tumbled as much as 16 percent, the most ever, and slid below 100 pence for the first time since it began trading in 2011. Anglo American Plc touched a 15-year low and Antofagasta Plc sank 7.3 percent. KAZ Minerals Plc, a small copper miner in Kazakhstan, lost 25 percent.

Mining companies are suffering under the lowest commodity prices in more than a decade and no signs of a turnaround in China’s economy. The largest companies in the industry have scrapped dividends, cut jobs and sold new shares to preserve profitability as the slump in raw-material prices continues.

"There’s broad based weakness across most miners today,” said Gavin Wood, chief investment officer at Kagiso Asset Management in Cape Town. “Glencore is more leveraged, somewhat higher cost than the other producers such as BHP. Glencore, in particular, doesn’t have the quality of assets that some of the others do."

Credit Suisse Group AG cut its price estimates for large diversified miners including Glencore and BHP Billiton Ltd.

Finding a Floor

"Until China demand and emerging-market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices," Credit Suisse analysts led by Liam Fitzpatrick wrote in a note Tuesday.

BHP Billiton said on Tuesday it’s planning to sell hybrid securities to help refinance near-term liabilities. The world’s biggest mining company reported a 52 percent drop in underlying full-year earnings last month, highlighting its challenges as Chief Executive Officer Andrew Mackenzie seeks to trim capital spending.

European steel producers slumped after Outokumpu Oyj said third-quarter delivery volumes may be 10 percent lower than the previous quarter. The stock sank 24 percent. Luxembourg-based Aperam SA fell 9.4 percent.

The Asian Development Bank cut its growth forecasts for China and said its waning appetite for raw materials would hurt commodity-focused export economies like Mongolia and Indonesia. The oversupply in copper will double to 598,000 tons by 2017 and prices are expected to decline, Nomura Holdings Inc. said in a report dated Monday.

Copper, Zinc

Copper declined 3.8 percent to $5,068.50 a metric ton. Zinc sank as much as 1.8 percent to $1,628 a ton, the lowest in five years. European coal for 2016 dropped below $50 a ton for the first time.

Glencore, which sells all three commodities, sank 11 percent to close at 106.35 pence in London trading. It earlier touched 99.59 pence, the lowest since the company’s $10 billion initial public offering in May 2011. The stock is this year’s worst performer in the FTSE 100 Index after falling 64 percent.

“Glencore is a bet on copper, and weakness in metal prices is sending tremors through Glencore’s shareholders,” said Richard Knights, a mining analyst at Liberum Capital in London.

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