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Major Correction Underway for Mining Stocks

  • 2016年05月10日 10:45
  • 來源:中國鐵合金網

  • 0
  • 關鍵字:nickel ore
[導讀]Mining and metals investors were offloading the sector's big names on Monday after sharp drops in iron ore and copper prices following weaker than expected imports by top consumer China and renewed fears about the robustness of the 2016 rally in commodity pric...

Mining and metals investors were offloading the sector's big names on Monday after sharp drops in iron ore and copper prices following weaker than expected imports by top consumer China and renewed fears about the robustness of the 2016 rally in commodity prices.

On the Comex market in New York copper for delivery in July fell as much 2.4% to $2.1025 a pound or some $4,635 a tonne. Copper's year to date performance fell back into the red on Monday following last year 26% drop.

Iron ore is now down 19% from its 2016 peak reached mid-April

Chinese copper imports which constitutes 46% of the global trade in the commodity, fell by 120,000 tonnes in April from the prior month. While year on year refined imports are still 5% higher, it's being accompanied by  accumulation of exchange stocks in China which are at record highs, an indication end-user physical demand may not be as strong as the customs data suggest. Copper concentrate imports declined 8% to 1.26 million tonnes from March, but year-to-date imports are up 31% to 5.27 million tonnes.

The correction in iron ore continued on Monday with the benchmark assessment falling 3.6% to $55.60 a tonne, the sixth straight day of declines. Iron ore is now down 19% from 16-month highs struck mid-April.

China utterly dominates the trade in iron ore, last year importing nearly 80% of seaborne cargoes.  April imports of the steelmaking raw material were up 4.6% compared to a year ago, but down from March. The country's iron ore imports are up from 2015 record-setting rate, but like copper has coincided with stockpiling. Inventories at the country's ports now stand at just under 100 million tonnes, up from 75 million tonnes during the summer months last year.

Anglo was once again the biggest loser – the stock is down 28% over the past week

The decline in the price of gold added to the negative mood in the sector after June futures gave up nearly $30 an ounce to $1,264 an ounce in heavy volumes. Year to date gains for gold is still a healthy 19.3%, but gold bulls are disappointed by the inability of the yellow metal to hold the $1,300 level it touched a week ago.

The bearishness spilled over to the sector heavyweights with investors rushing for the exits and booking gains on stocks that have enjoyed huge run-ups since January.

Shares in world number one BHP Billiton (NYSE:BHP) lost 6% in New York trading making it the only counter back in negative territory for the year. The $70 billion Melbourne-based company which relies on oil and iron ore for the bulk of its earnings hit near decade lows last year following a deadly dam burst at an iron ore mine in Brazil it jointly owns with Vale.

The suit could turn into Vale and BHP's version of Deepwater Horizon

Shares in Vale (NYSE:VALE.P), the world's top iron ore producer, fell 8.4% in New York. The Rio de Janeiro-based company which also holds the top spot for nickel production is down 21% over the past week for a market value of $21.8 billion.

Last week the two giants were hit a with a $44 billion civil suit from Brazilian state prosecutors including a $2.2 billion payment upfront for damages and clean up costs related to the Samancor disaster. The claim which could turn into Vale and BHP's version of Deepwater Horizon  – is over and above a signed agreement with the federal government of the South American nati0n for more than $6 billion in fines and reparation costs.

The world's second largest miner based on revenue Rio Tinto (NYSE:RIO) declined 7.2% in New York affording it a market cap of $51.8 billion. The Melbourne-HQed company’s outgoing CEO Sam Walsh has been pouring cold water on the 2016 rally in iron ore and metals saying fundamentals show that it is unsustainable.

Anglo American (LON:AAL, OTCMKTS:AAUKF) was once again the biggest loser on Monday giving up 13.7% in New York. The counter is now down 28% over the past week as investors take profits in the company which is still up 80% in 2016. Anglo, the world's fifth largest publicly held mining company in terms of output, is in the middle of a radical restructuring and downsizing process which would leave the London-listed company a shadow of its former self.

Freeport's been struggling to get its $20 debt load under control following the ill-timed acquisition of oil and gas assets

Top copper producer Freeport-McMoRan (NYSE:FCX) plunged 10.3% with a 42 million shares having changed hands by lunchtime as the counter gets hit by metal and oil weakness. The Phoenix-based company is now worth $13.8 billion on the NYSE,  down 24.7% over just five days of trading.

Freeport on Monday announced the sale of its massive Tenke Fungurume mine and exploration assets in the Democratic Republic of Congo along with a European refinery to a Chinese company for $2.7 billion. Like most of its peers Freeport has been struggling to get its debt load under control which ballooned to $20 billion following the ill-timed acquisition of oil and gas assets.

Glencore (LON:GLEN) was also being punished, losing 8.4% in in New York following similar losses in London trading. The Swiss mining and trading giant which like many in the sector is putting assets up for sale made a contrarian investment on Monday, becoming struggling Atlas Iron, an Australian iron ore miner, top investor.

Toronto's Barrick Gold (NYSE:ABX) which earlier this year was the best performing stock across all sectors on the Toronto Stock Exchange, did not escape the carnage on Monday. The world's top gold producer in terms of output fell nearly 7% in New York and the $21 billion stock now down 10.8% since hitting near two-year highs at the end of April.

Teck Resources (NYSE:TCK) down 10.8% for a $5.5 billion valuation was ripe for a correction following a 142% jump since the start of the year. The Vancouver-based company which is Canada's largest coal, copper and zinc producer and has invested heavily in the oil sands, has lost a fifth in value since Monday last week.


 

  • [責任編輯:zhang yuan]

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