Copper Narrows Biggest Quarterly Drop in Four Years on Mine Cuts

Glencore Rises After Biggest-Ever Advance on Tuesday
  • Collahuasi mine in Chile to cut annual output by 30,000 tons
  • Copper gains as much as 4.5%; Glencore shares extend rebound

Copper advanced to cut its biggest quarterly slump in four years as an Anglo American Plc and Glencore Plc venture said it plans to reduce production at Chile’s second-biggest mine for the metal.

Prices climbed as much as 4.5 percent after Cia. Minera Dona Ines de Collahuasi said on Tuesday it will reduce annual copper output at the Collahuasi mine by about 30,000 metric tons. The move is the latest in a wave of global production cutbacks following a slowdown in Chinese demand that’s sent prices slumping.

Copper fell 10 percent this quarter and is trading near the lowest in six years as economic growth in China, the world’s biggest user, expands at the slowest pace in more than two decades. That’s exacerbating oversupplies of the metal and has hurt profit at the biggest mining companies. Glencore rallied for a second day, after slumping by a record 29 percent on Monday, as analysts said the stock is cheap.

“The announcement to cut production will help support copper prices,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by phone. “It’s not just been a bad quarter for copper, it’s been a pretty bad year too.”

Copper for delivery in three months rose 3.8 percent to settle at $5,160 a ton ($2.34 a pound) at 5:50 p.m. on the London Metal Exchange, the biggest gain in three weeks. The 10 percent drop this quarter was the biggest since the three months ended September 2011.

Metal Declines

The LMEX index of six main metals posted a fifth straight monthly loss, the longest run since January 2009.

Glencore led gains in mining companies on Wednesday, rising as much as 16 percent to recover much of the losses from Monday’s selloff. The Bloomberg World Mining Index gained 2 percent, ending an eight-day decline that was the longest since July. Freeport-McMoRan Inc. and Vancouver-based First Quantum Minerals Ltd. also increased.

Copper canceled warrants, or orders to remove the metal from warehouses tracked by the LME, jumped 54 percent, the most since March, bourse data show. The amount of metal available for withdrawal fell 10 percent to 242,950 tons, the lowest since June.

Inventories in China’s bonded warehouses dropped 22 percent in September from August as arbitrage profits widened, according to a Bloomberg Intelligence survey. That was the third consecutive monthly decline. Traders and producers bought the metal on the LME and imported supplies to China for higher prices, fueling shipments from bonded warehouses to domestic markets, Bloomberg Intelligence analysts Yi Zhu and Kenneth Hoffman said in a report.

Copper neared its 200-month moving average of about $5,020.15 a ton.

“When you’re looking at price patterns and you look at 2008, we got down to the 200-month moving average and bounced from there,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “You probably have some technical strategists saying potentially there’s a bottom in place, based on that particular indicator.”

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