The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar. File picture: Michael Buholzer, Reuters The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar. File picture: Michael Buholzer, Reuters
London - Glencore, the commodities trader and miner that’s the worst performer on the UK’s benchmark stock index this year, slipped to near a seven-week low as the slump in commodities 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. Glencore lost as much as 6.7 percent as all six main contracts on the London Metal Exchange dropped.
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, with copper reaching the lowest since 2009, 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.
Glencore slid 4.1 percent to 88.53 pence by 8.33am in London, taking this year’s drop to 70 percent. Anglo American, the next biggest decliner in the FTSE 100 Index, fell 4.3 percent to 427.25 pence, near the lowest since at least 1999.
Copper fell through $4 500 a metric ton for the first time since 2009, dipping 2.1 percent to $4,486 a ton on the LME. Nickel plunged 5.7 percent to the lowest since 2003.
Raw material prices have also been put under pressure on expectations that US 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 US rate increase at the Fed’s last meeting of 2015.
BLOOMBERG