Copper, iron ore price jump sparks rally in mining stocks
Mining and metals investors were piling into the sector’s big names on Wednesday as gold jumped, base metals prices surged and iron ore continued to rally on optimism about global demand for raw materials ahead of a holiday week in top consumer China.
Gold enjoyed its best trading since the Brexit vote in June 2016 on Wednesday. Copper bounced to above the $7,000 a tonne ($3.24 per pound) level bringing the bellwether metal’s gains just this week to more than 6%. Nickel surged 4.8% to $14,100 a tonne, the highest since May 2015, while zinc ended nearly 3% higher to exchange hands for $3,567, a near decade high.
The iron ore price which has been defying expectations of a pullback for months gained on Wednesday with benchmark Northern China import prices rising to a five-week best of $78.25 a tonne. The last time thew steelmaking raw material traded above $80 was April 2017. Coking coal was also higher at $233.10 a tonne. Premium Australian exports were at $154 a tonne this time last year.
The bullishness spilled over to mining’s heavyweights which outperformed broader gains on US equity markets.
Shares in world number one miner BHP Billiton (NYSE:BHP) gained 2.8% in New York while Anglo-Australian peer Rio Tinto (NYSE:RIO) added 1.8%. Both companies are worth more than $100 billion having doubled in value since the beginning of 2016 when the mining industry hit the bottom of the cycle.
Vale (NYSE:VALE.P), the world’s top iron ore and nickel producer, was one of the best performers on the day with a 6% jump valuing the company at $73.1 billion. The Rio de Janeiro-based company is up 30% over the past year and is up a fourfold since the end of the downturn when iron ore reached $37 a tonne and nickel bottomed at $7,700 a tonne.
Anglo American (LON:AAL) gains were a relatively modest 1.4% in New York on Wednesday for a $23 billion valuation. Obituaries were being written for Anglo two years ago before the 100-year old company went on radical restructuring drive. Since then the world’s fourth largest diversified miner has surged 500%.
Top listed copper producer Freeport-McMoRan (NYSE:FCX) jumped 7.4% and with Vale was among the NYSE’s top 10 most actively traded stocks on Tuesday. The Phoenix-based company announced last week that it’s reinstating a cash dividend for shareholders suspended in December 2015.
Glencore (LON:GLEN) was also higher, with its London shares gaining 1.8% on the day. Glencore is the world’s third largest copper company in terms of output with production of 1.3m tonnes last year.
World number five copper producer Southern Copper (NYSE:SCCO) traded 5.7% for the better while Canada’s largest diversified miner, Teck Resources (NYSE:TECK) gained 2.7% in New York despite reporting worse than expected earnings on Wednesday.
Gold miners also shined with top producer Barrick Gold adding 3% affording the Toronto-based company a $20 billion market valuation in New York. Barrick traded higher after hours after reporting quarterly results in line with expectations. Gains for world number two producer Newmont, the world’s most valuable gold mining company, topped 5%.
Vancouver-based Goldcorp added 4% for a market cap of $11.5 billion during normal trading hours and added to gains in after hours dealings after releasing stronger than expected quarterly results. Shares in Toronto’s Kinross Gold surged 8.6% during the day, but gave up most of the gains in after-hours trading after delivering financials that disappointed the market.