Metals Drop With Mining Stocks as Commodities Rout Deepensby
Anglo reaches record low; Freeport falls to lowest since 2002
Bloomberg metals index falls 29% in 2015 as China slows
Mining companies retreated as Anglo American Plc’s decision to sell assets and scrap its dividend added to concern about the industry’s future. Aluminum and nickel prices fell in London.
While Anglo is restructuring its business to cope with lower commodity prices, the turnaround plan didn’t mention major production cuts to nickel, zinc or copper. Trade data earlier from China also pointed to a further weakening of economic conditions in the world’s biggest consumer of industrial metals.
The Bloomberg Industrial Metals Subindex has tumbled 29 percent this year as economic expansion cools to the slowest pace in a generation in China, the world’s top consumer. The slump is hurting producer profits and forcing companies to take more cost-cutting measures. The Bloomberg World Mining Index of shares tumbled as much as 4 percent, the biggest such loss since August. Freeport-McMoRan Inc., the top publicly traded copper miner, traded at the lowest since 2002.
Big mining companies "want to keep producing, keep driving down the cost of production and hope to be among the last men standing," said Andrew Silver, a broker at Triland Metals Ltd. in London. "That’s been the story for iron ore, base metals and steel. It’s too much supply for not enough demand."
Aluminum for delivery in three months fell as much as 1.5 percent on the London Metal Exchange, and settled at $1,477 a metric ton at 5:50 p.m. local time. Zinc dropped as much as 2 percent, before closing unchanged. Nickel and tin slid, while copper and lead rose.
Anglo shares traded at a record low in London. The company will eventually employ 50,000 people, compared with 135,000 now, Chief Executive Officer Mark Cutifani said on a conference call with reporters Tuesday, without giving a time frame.
Glencore Plc dropped as much as 11 percent, while Brazil’s Vale SA tumbled to the lowest since 2003.
China’s overall exports declined for a fifth month and imports contracted in sluggish trade figures that underlined weaker economic growth.
While the broad trade picture for China reinforced concerns over its economic deterioration, customs figures showed copper imports rising to the highest since January 2014, and imports of copper concentrate at a record. Imports of unwrought copper and products advanced to 460,000 tons in November, up 10 percent from a year earlier.
Copper futures for March delivery added 0.1 percent to $2.054 a pound on the Comex in New York.