Mining stocks slump with Vedanta, Glencore down more than 5%
Aluminum succumbs to rout as stocks fall on U.K. election
An index of base metals retreated the most since November as Commerzbank said China’s economic growth may decline over the next few quarters. Citigroup Inc. said it’s bearish on the outlook for iron ore amid expectations for global oversupply and a slowdown in Chinese steel demand. Zinc and nickel, both used in steel alloys, plunged by the most this year as U.S. stocks dropped.
Metals have pulled back in the past two months, after surging last year, as investors question the boost from President Donald Trump’s infrastructure spending plans and the sustainability of Chinese demand growth.
“People are getting paranoid about the levels we’re at,” says Peter Thomas, a Chicago-based senior vice president at metals broker Zaner Group LLC. “There’s been an awful lot of buying so we’re getting profit-taking and capitulation.”
London Metal Exchange zinc for delivery in three months fell 3.8 percent to $2,525 a metric ton, the steepest decline since December. Nickel dropped 4.5 percent, the most since November.
Mining companies are also retreating with Vedanta Resources Plc, Glencore Plc and Anglo American Plc among the biggest losers.
An iron ore benchmark dropped 4.6 percent on Tuesday, extending declines after slumping into a bear market this month amid concern that supplies are rising at the same time that steel prices in China sag.
Slowing housing prices in China is fanning concern of another steel glut, which is weighing on base metals, according to Ryan McKay, a commodities strategist at TD Securities.
“Less construction demand means less demand for housing, means less demand for steel and less demand for all the base metals that go into steel,” he said by telephone from Toronto. “Demand expectations have been pretty high, so if that starts to trail off you’re going to see these metals tail off a little bit.”