Mining Stocks Slide as Commodity Rout Deepens on Dollar Gains
Anglo American Plc and Kaz Minerals Plc fell as a gauge of mining companies slipped to near the lowest in almost seven years after the rout in commodity prices deepened.
The Bloomberg Commodity Index of 22 raw materials slid to a 16-year low, dragging the FTSE 350 Mining Index down as much as 3.5 percent, as copper fell below $4,500 a metric ton for the first time since 2009. Anglo American, the second-worst performer on the U.K.’s benchmark stock index this year, lost as much as 4.8 percent and Kaz Minerals dropped as much as 6 percent.
Mining companies have been hit by slowing economic growth in China that has cut demand in the biggest commodities user and pushed metals prices lower, forcing some producers to cut unprofitable output. Industrial metals retreated as comments from Federal Reserve officials about the prospect of an interest-rate increase in December strengthened the dollar.
“With large surpluses looming prices may need to continue falling to encourage the supply cuts the copper market needs in order to rebalance over the medium term,” Kevin Norrish, an analyst at Barclays Plc in London, wrote in a report Monday.
Anglo American was down 2.5 percent at 435.45 pence by 9:19 a.m. in London, taking its drop this year to 64 percent. Kaz Minerals was 3.5 percent lower at 89.35 pence.
Glencore Plc, this year’s worst performer in the FTSE 100 Index, slipped to near a seven-week low before paring losses to 2.1 percent.
The FTSE mining gauge reached the lowest since December 2009 on Nov. 18. Copper dipped 1.9 percent to $4,492 a ton on the LME on Monday, while nickel plunged as much as 5.7 percent to the lowest since 2003.
Raw material prices have also been put under pressure on expectations that U.S. policy makers will soon raise borrowing costs for the first time since 2006. A stronger dollar makes metals priced in greenbacks costlier for buyers holding other currencies.
John Williams, president of the Fed Bank of San Francisco, said at the weekend that there was a “strong case” for a U.S. rate increase at the Fed’s last meeting of 2015.