September 10, 2015

Ongoing volatility in mining and metals, Glencore & Copper

by Ewen Emmerson

in Research

A view from the Economist;

After Glencore’s copper cropper: a bounce

Has Glencore come to the rescue of copper, or is copper supporting struggling Glencore?

A sharp relief rally has lifted both the red metal’s price and the diversified mining firm’s shares. Glencore has this week pledged to cut debt, cancelled its dividend and halted operations at two of its mines where costs are highest, in Democratic Republic of Congo and Zambia (both are in line for big and lengthy upgrades). The timing was good. Other miners are cutting production and China reported a slight uptick in demand in August, so traders hurried to take account of the tighter market, and short-sellers who had bet against Glencore’s sliding share price took their profits. But in the long run China’s fortunes will be far more important to copper than Glencore’s. If Chinese demand slows further, copper will slide again. So will Glencore’s share price.