Glencore Leads Slump in Mining Stocks as Metals Retreat on China

  • Nickel leads slide as metals extend drop from four-month high
  • Glencore plummets as much as 19% in London trading Tuesday

A gauge of mining stocks fell the most in seven years as Glencore Plc tumbled and copper retreated after a report showing slackening Chinese exports reignited concerns over slowing demand and growing metals gluts.

China, the world’s biggest industrial-metals user, posted the biggest drop in exports since 2009. The FTSE 350 Mining Index slid 11 percent, the largest fall since December 2008, as Baar, Switzerland-based Glencore plummeted 18 percent. Nickel led declines on the London Metal Exchange, with copper falling the most since November.  

Copper touched a four-month high last week on expectations that Chinese policy makers would add more stimulus to bolster the economy. While iron ore and miners rallied on Monday after the nation pledged to shore up growth, copper remained subdued. Goldman Sachs Group Inc. said in a note Monday that recent metals rallies are “not supported by the broader financial environment in China.”

“We’ve seen quite the significant move to the upside in copper over the last week or so, but the drop is being done in response to the negative Chinese trade data we saw overnight,” David Meger, the director of metals trading at High Ridge Futures in Chicago, said in a telephone interview.

Copper for delivery in three months slid 2.6 percent to settle at $4,868 a metric ton ($2.21 a pound) at 5:51 p.m. on the LME, the biggest decline since Nov. 16. Copper futures for May delivery dropped 2.7 percent to $2.222 a pound on the Comex in New York.

Miners Fall

London-based Anglo American Plc dropped as much as 16 percent, the most since 2009, after climbing the previous eight days to touch the highest since October. The 9.4 percent loss for Phoenix-based Freeport-McMoRan Inc. was among the biggest on the Standard & Poor’s 500 Index on Tuesday. Brazil’s Vale SA slid 10 percent.

Metals have rebounded in 2016 from multi-year lows on optimism that output cuts would curb oversupplies and as policy makers around the world try to stimulate economies. Still, Goldman Sachs sees copper and aluminum falling as much as 20 percent in the next 12 months, and views long positions in zinc as risky.

“These kinds of rallies tend to be rare and short-lived,” Katherine Nixon, chief investment officer of wealth management at Northern Trust Corp., said in an interview with Bloomberg Television on Monday. “You had deeply oversold markets that had significant short positions that people are rushing back into cover.”

  • On the LME, nickel fell 8.5%, the most since July 7, while aluminum, zinc, lead and tin dropped.
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