Crash in copper shakes miners

Despite optimism expressed about a developing commodities bull market, global miners received a severe jolt on Friday from a retreating copper price.

Despite optimism expressed about a developing commodities bull market, global miners received a severe jolt on Friday from a retreating copper price.

Copper shed more than 3% on Thursday, dragging the JSE’s big miners down. The resources index slid 3.08%, with Anglo American losing 5.24% to R202.10. BHP Billiton retreated 4.44% to R212 and Glencore tumbled 5.94% to R51.90.

Tin was down 2.8% and zinc lost 2.6%. Aluminium shed 1%.

Analysts said the reduction in the copper price was due to renewed jitters about the Chinese economy, with concern expressed about an overheated property sector. At the same time, officials in US President Donald Trump’s administration indicated plans for infrastructure spending had been extended to the end of the year.

“There have also been significant disruptions to the supply of some primary commodities,” said Andy Pfaff, the head of commodities at MiltonOptimal.

The world’s two largest copper mines, in Chile and Indonesia, had ceased production due to wage negotiations and regulatory changes, respectively, Pfaff said.

Goldman Sachs upgraded its global outlook on commodities to “overweight” at the end of 2016. “We are seeing a cyclical uptick in global economic activity, and that was driving demand for all commodities,” said the US bank’s commodities research head, Jeffrey Currie.

Platinum miners were not spared on the day. The platinum index on the JSE retreated 2.50%, despite the platinum price climbing 1.8% to a fourmonth high of $1,026.59/oz.

Gold gained 0.82% to $1,255/oz, a three-month high.

A stronger rand contributed to the mining rout, as a stronger local currency reduces the foreign earnings from exports.

The rand has gained more than 4% against the dollar in February, hitting a 19-month high of R13.20/$ last week.