The price of copper hit a fresh six-year low below $5,500 a tonne, a worrying indicator for those who believe the oil’s price decline is merely a supply issue.
Freeport-McMoRan Inc. (NYSE:FCX), the largest publicly traded copper miner and Glencore (LON:GLEN), the third-biggest, were leading Wednesday a global mining stocks collapse triggered by metal prices hitting fresh six-year lows.
Freeport declined almost 11% to $8:80 at 10:18 a.m. in New York and traded at the lowest since April 2009. Glencore went down 12% to 236.20 pence, its lowest level on record, recovering slightly in afternoon trading in London. Such plunge, according to Reuters, may thwart any attempts of a fresh takeover offer on rival Rio Tinto.
Copper was leading a general slump in industrial commodities Wednesday. Prices were slammed as the March contract tumbled 15 cents to US$2.49 a pound in New York, as inventories of the metal viewed as an economic bellwether grow. Copper prices have also been impacted by slowing growth in China and have tumbled 25% over the past year.
The Toronto Stock Exchange base metals component fell almost 12%, adding to a 10% dropped on Tuesday. Metal producer First Quantum Minerals (TSX:FM) plunged $2.68 or 20 per cent to $10.79, while Teck Resources (TSX:TCK.B) lost $1.55 or 10.5 per cent to $13.11.
“While the fundamentals for copper specifically are practically screaming ‘buy’, particularly on a relative value basis, it is tough to call a bottom given general commodity sentiment,” said analysts at Citi.
On top of the commodities rout, the World Bank announced it is cutting its global growth forecast to 3% for 2015, from an earlier estimate of 3.4%. The bank specifically cited concerns over a “disorderly slowdown” in China. It said lower property and land sales would prevent the national and local governments from boosting growth by investing in infrastructure.
