- Bloomberg World Mining Index at 12-year low as equities slump
- Copper's positives `lost in market maelstrom,' says Citi
Mining stocks plumbed a 12-year low and metals resumed their slump as sinking oil and equity markets fueled concerns about world economic growth and prospects for demand.
Oil plunged and stocks from Asia to Europe slid, fueling a rush to haven assets such as gold. The Bloomberg World Mining Index dropped as much as 3.3 percent to its lowest since September 2003, with the world’s biggest miner, BHP Billiton Ltd., losing 7.4 percent in London. Citigroup Inc. cut copper and other base-metals forecasts.
“The market is under a tremendous amount of pressure,” Peter Thomas, a senior vice president at Zaner Group LLC, a metals broker in Chicago, said in a telephone interview. “I don’t see directionally that turning around much for a little bit, until we see demand pick up a little.”
Copper futures for delivery in March slipped 0.9 percent to settle at $1.9595 a pound at 1:13 p.m. on the Comex in New York. Prices are down 8.2 percent this month, after slumping for three straight years. Copper, aluminum, lead, nickel and zinc fell on the London Metal Exchange, while tin advanced.
West Texas Intermediate oil futures extended a drop from the lowest close in more than 12 years. Weak energy markets undercut metals by reducing costs for miners, allowing them to maintain supply even as prices fall.
Raw materials and their producers have been dragged lower this year on concern that demand in China, the world’s largest metals user, will continue to slow. State Grid Corp. of China, the state-owned electricity provider that uses copper cabling for power distribution, plans to cut investment spending by almost 3 percent in 2016, according to a posting on a website run by the utility.
Glencore Plc tumbled 9.9 percent in London, leading declines in the Bloomberg World Mining Index. Freeport McMoRan Inc., the world’s largest publicly traded copper producer, plunged as much as 11 percent. First Quantum Minerals Ltd. slumped as much as 25 percent in Toronto, before paring losses to 5.4 percent.
The world’s biggest miners have little to offer to shareholders, Investec Plc said. They are selling assets and ending dividend payments to generate cash, analysts wrote in a report Wednesday. Earnings are now a “scarce commodity” for the industry, they wrote.