Mining Companies Slump as Citi Sees Rally Running Out of Steamby
Anglo among worst miner performers; AK led steelmaker declines
Copper on longest losing streak since April as stocks swell
Mining companies including Anglo American Plc and Antofagasta Plc fell along with most metals as the dollar advanced and Citigroup Inc. turned bearish on the industry.
Citi analysts cut their six-month stance to bearish, reversing their upgrade of the sector, saying a sharp rally the past few months is unlikely to continue. The Bloomberg World Mining Index, which rose 18 percent in June and July, is on pace to fall more than 3 percent in August. Bets on higher U.S. interest rates rates have boosted the dollar, making raw materials such as copper more expensive for holders of other currencies.
“Copper has been hit quite hard, as well as nickel,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “There are renewed worries about what’s going to happen to China, especially if looking forward we’re talking about potential rate hikes further out this year.”
Copper for delivery in three months dropped 0.2 percent to settle at $4,607 a metric ton ($2.09 a pound) at 5:56 p.m. on the London Metal Exchange, falling for a seventh straight session, the longest stretch since April.
Speculation that the U.S. central bank will increase rates this year has surged over the past two weeks, halting a global equities rally and lifting the dollar. Policy makers including Fed Chair Janet Yellen said the case for a move is getting stronger. Gains in the dollar curb demand for commodities priced in greenbacks as an alternative investment.
The BI Global Large Base Metals Competitive Peers index of 18 companies dropped for a fourth time in five sessions. Losses were paced by declines in Anglo American and Antofagasta, which fell 4.8 percent and 5.5 percent, respectively, in London trading. Shares of Phoenix-based copper miner Freeport-McMoRan Inc. slid 3.2 percent while Mexican silver producer Fresnillo Plc lost 5.6 percent.
AK Steel Holding Corp. paced declines by steelmakers, losing 5.1 percent and heading for its steepest monthly decline since January last year.
In other metals news:
- Copper stockpiles in warehouses tracked by the LME expanded for a sixth day, the longest run since May.
- On the LME, aluminum, zinc and tin fell, while nickel and lead gained.
- Copper futures for December delivery slid 0.1 percent to $2.0765 a pound on the Comex in New York.