It’s already a rough 2016 for mining companies that are suffering through their worst start to a year in almost a decade.
The Bloomberg World Mining Index has fallen about 4 percent since Dec. 31, the biggest such drop since 2007. The 80-member gauge on Wednesday reached a seven-year low, dragged down by slumping prices for zinc and copper. Investors are shunning metals amid even more bad news for the economy in China.
A private gauge of Chinese services slumped to the second- lowest reading since the series began a decade ago, a report showed Wednesday. Equities fell around the world as China’s unexpected weakening of its currency once again raised fresh concern about the strength of the global economy. Commodities also dropped after North Korea said it detonated its first hydrogen bomb, spurring concerns that rising geopolitical tensions will also stifle growth.
“Sentiment is close to as negative as I’ve ever seen,” Jeremy Sussman, a New York-based analyst at Clarksons Platou Securities Inc., said by telephone.
The Bloomberg World Mining Index declined 1.6 percent to 123.10 at 2:27 p.m. New York time. First Quantum Minerals Ltd. plunged as much as 8.7 percent in Canada. In London, BHP Billiton Ltd., the world’s biggest miner, fell almost 5 percent.
On the London Metal Exchange, zinc for delivery in three months retreated 1.7 percent to settle at $1,546 a metric ton. Tin, lead, and copper also declined, while aluminum and nickel rose. On the Comex in New York, copper futures dropped.
“North Korean news, coupled with weaker-than-expected Chinese PMI numbers – this time from the service side of the industry — is behind a generally weaker tone,” Edward Meir, an analyst at INTL FCStone in New York, wrote in a report. “We suspect that metals will likely be in for a difficult patch this year.”
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