Miner Rally Fades Along With Copper as Cutback Cheer Questioned

  • Glencore, First Quantum lead declines after BHP-led Asia rally
  • Doubts persists whether output cuts will implemented: Turek

The biggest mining equities rally in months lost steam as Glencore Plc and First Quantum Minerals Ltd. fell for the first time this week amid declining industrial metal prices. Gold producers extended gains.

Glencore retreated 0.7 percent as copper slipped and nickel touched its lowest level since Dec. 15. While BHP Billiton Ltd. rallied 5.3 percent in Australia, it fell in London. Vancouver-based copper miner First Quantum dropped as much as 8 percent after Wednesday’s 17 percent surge.

Producers including Glencore and Freeport McMoran Inc. had pledged deeper production cutbacks to help stem a metals glut that sent prices to a six-year low in November. While prices have since rebounded, the metal for three month delivery declined 0.6 percent to settle at $4,692 a metric ton ($2.13 a pound) at 2:51 p.m. on the London Metal Exchange, trimming this month’s gain to 2.3 percent. On the Comex in New York, futures for March delivery slipped less than 0.1 percent to $2.124 a pound.

“It’s a bit of a mixed bag this morning,” Michael Turek, the head of base metals at BGC Partners Inc. in New York, said in a note. “Our market has been pricing in cuts for a while but there is some doubt as to whether all of the announced cuts will indeed be made.”

Gains in previous days and the rally in Asia Pacific mean the Bloomberg World Mining Index has its biggest weekly gain since Oct. 9. Data showing consumer confidence in the U.S. rising last week to the highest in almost two months, the increase in American consumer spending in November and speculation that China will take steps to stimulate its economy had lifted investor confidence.

“All of the positive developments set a favorable tone for 2016 investment strategy, especially in cyclical commodity laggards.” Helen Lau, an analyst at Argonaut Securities (Asia) Ltd. in Hong Kong, said in an e-mailed note. “Looking ahead, China’s proactive and supportive economic measures that set out at the China Economic Work Conference put a floor on China’s slowdown.”

Lead gained on the LME, while aluminum, zinc, nickel and tin fell. The LME closed earlier Thursday and reopens on Dec. 29.

Gold miners Goldcorp Inc. and Newmont Mining Corp. advanced 3.3 percent and 2.2 percent, respectively, as bullion futures rose for the first time in three sessions amid a weaker dollar that boosted the appeal of the precious metal as an alternative asset.

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