Mining stocks massacre as copper price craters by 9%

May delivery copper is now down 18.4% from its record high hit near the end of March on frantic US buying ahead of the tariffs, only just escaping a technical bear market. In London copper did not fare much better, dropping 6.8% to $8,734 per tonne, the lowest since March 2020 at the onset of the covid pandemic.

Fair warning
A warning issued by BNP Paribas last week has turned out to be prescient. The French bank predicted a collapse in copper prices with senior commodities strategist David Wilson saying the imposition of tariffs will end the pricing dislocation, turning the market’s focus to the negative demand impact of US trade policies. BNP predicts a retreat to $8,500 a tonne this quarter.

Given its widespread use in industry, manufacturing, and construction copper is particularly vulnerable to slowing economic growth and the prospect of an outright recession sparked by what now appears to be a full-blown global trade war.

Max Layton, global head of commodities research at Citigroup, said in an interview with Bloomberg Television that copper could fall by another 8% to 10% in the coming weeks while JP Morgan now predicts a 60% chance of a global recession if the tariffs continue.

The entire base metals complex retreated sharply leading to a broad-based sell-off in the sector.

Shares trading in New York of world no 1 mining company BHP (NYSE: BHP) dropped 9.5% for a market value of $107.3 billion while its nearest rival Rio Tinto (NYSE: RIO) fell 6.4% to $93.5 billion in three times usual trading volumes.

Weakness in the Australian giants were compounded by a bearish outlook for iron ore, their traditional bread and butter commodity after Goldman Sachs predicted the steelmaking raw material could fall by as much as 15% from current levels around $100 a tonne.

Bear market
Copper specialist Freeport-McMoRan (NYSE: FCX) which vies with BHP as the world’s top copper producer after Chile’s state-owned Codelco was the hardest hit on the day with a 13.1% decline after nearly 45 million shares changed hands. FCX is down 24.1% over the past week and is now worth $41.9 billion in New York.

Mexico’s Southern Copper (NYSE: SCCO) fell 9.6% on Friday bringing losses for the week to 16.7% and a market value of $62.4 billion. Southern Copper and Chinese firm Zijin Mining (NYSE: ZIJMY), down 7.2% at $56.9 billion both produce more than 1 million tonnes of the metal annually.

Glencore and (LON: GLEN) Anglo American (LON: AAL) depository receipts trading in the US declined by 11.5% and 11.0% respectively affording the diversified miners market capitalization of $36.9 billion and $28.6 billion respectively. Swiss-based Glencore and London-listed Anglo American are the world’s number six and seven copper companies based on output and both are down 20% for the week.

Further down the production stakes, Canada’s Teck Resource (TSE: TECK.B) also took a major hit, down 12.1%, while fellow Vancouver-based copper miners Ivanhoe Mines (TSE: IVN) saw its shares decline by 12.6% and First Quantum Minerals (TSE:FM) fell 12.8%.