Copper market chaos hammers mining stocks
COLLAPSING copper prices and the continued decline of the oil market hammered stocks in the commodities sector yesterday.
Copper fell as much as eight per cent to a five-year low of $5,522 per tonne, a move that analysts attributed to growing excess supply in the market, with China accounting for 40 per cent of global consumption.
Mining giant Glencore, which is heavily exposed to copper, tumbled by 9.28 per cent yesterday, and analysts at S&P Capital IQ downgraded the company’s rating from buy to hold.
The broker said it expected weaker commodity prices to hit the miner’s profits.
Similarly, BHP Billiton was downgraded from buy to hold. The Australian firm’s shares plunged by 5.31 per cent, while Chile-based copper mining specialist Antofagasta saw its shares drop by 4.8 per cent, and Rio Tinto fell by 3.95 per cent.
David Papier, market analyst at ETX Capital, warned that copper is “often considered a barometer of industrial demand”, and said the slump leant extra gravitas to news that the World Bank had cut its 2015 growth forecasts.
Meanwhile, the price of crude oil rose slightly during the day, although it is still below the $50 mark. A speech from the UAE’s oil minister yesterday failed to boost the market, as he stated that there would be no change in production policy from Opec.