Industrial Metals Drive Commodities Down on China, Greece WoesDebarati Roy and Mark Shenk
Copper tumbled to a six-year low and nickel plummeted the most since 2010 as industrial metals led a plunge in commodities after China’s equity rout and turmoil in Greece eroded prospects for raw-material demand.
The Bloomberg Commodity Index of 22 prices fell 1.5 percent to close at 97.6 after touching 96.48, the lowest since March 18. Aluminum and lead entered bear markets. Freeport McMoRan Inc., the world’s top publicly listed copper producer, posted the fifth-biggest drop among companies in the Standard & Poor’s 500 Index. Glencore Plc, the largest commodity trader, slumped to a record in London.
A flurry of measures by the Chinese government aimed at stabilizing the equities market is failing to stop the selloff that erased more than $3.2 trillion of value in less than a month. Greek Prime Minister Alexis Tsipras is in Brussels on Tuesday for what could be a last chance to secure a rescue from European leaders and keep his country in the euro after voters rejected more spending cuts and tax increases.
“People have been concerned about China for some time now, but desperate measures by the government to stop the equity market rout have got people very worried about the economy,” Walter “Bucky” Hellwig, who helps manage $17 billion as a senior vice president at BB&T Wealth Management in Birmingham, Alabama, said by phone. “Also, the dollar soaring because of the crisis in Greece is pushing all commodities lower. It’s not a pretty picture.”
The dollar climbed to a five-week high against a basket of 10 major currencies as investors sought the relative safety of U.S. assets. Stocks rebounded as speculation increased that Greece’s crisis would be contained.
The rout in China, which accounts for almost half of global copper demand, is damaging confidence in global commodity markets, Capital Economics Ltd. said Tuesday in a report. European finance ministers and leaders from the region meet on Tuesday, and they have all made clear the onus is on Greece to explain how it plans to pull itself out of the crisis.
“There is so much concern, and unless the Chinese government takes some extraordinary measures we may see demand remaining under pressure,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Overall, there are global economic concerns.”
On the London Metal Exchange, copper for delivery in three months fell 4.5 percent to settle at $5,339.50 a metric ton after touching $5,261.50, the lowest since July 2009. Nickel tumbled 9 percent to $10,650 a ton, the biggest drop since May 5, 2010.
The LME gauge of six metals fell 4 percent to 2,455.4, extending a slump to the lowest since July 2009. The drop was the biggest since Dec. 14, 2011.
Silver futures for September delivery fell 5 percent to $14.969 an ounce after touching $14.62, the lowest for a most-active contract since Dec. 1. Gold dropped to a 15-week low as investors shunned the metal often considered a haven.
Newmont Mining Corp., the biggest U.S. gold producer, tumbled 6 percent to $22.41, the largest drop in the S&P 500. Freeport fell 3.3 percent to $17.25 after touching $16, the lowest March 2009.
Corn, soybeans and wheat futures dropped in Chicago. Crude oil in New York traded close to a three-month low.
“There’s just a lot of negative headwinds on the macro side,” Francisco Blanch, head of commodities research at Bank of America Corp., said in an interview on Bloomberg Television’s Surveillance.
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