UK miners decline on rout in commodity prices as China cuts growth
Miners are amongst some of the biggest fallers on the FTSE 100 index on Friday as a further erosion of commodity prices on the back of China cutting its economic growth forecasts this week, together with a firmer US dollar.
Anglo American
2,111.00p
16:40 23/04/24
BHP Group Limited NPV (DI)
2,337.00p
16:45 23/04/24
Fresnillo
578.50p
16:40 23/04/24
FTSE 100
8,044.81
16:49 23/04/24
FTSE 250
19,799.72
16:59 23/04/24
FTSE 350
4,424.29
16:59 23/04/24
FTSE All-Share
4,378.75
17:09 23/04/24
KAZ Minerals
849.00p
16:40 10/05/21
Mining
10,339.98
16:59 23/04/24
Randgold Resources Ltd.
6,546.00p
17:00 28/12/18
Rio Tinto
5,317.00p
16:40 23/04/24
Overnight in Asia, iron ore prices slumped to a six-year low on the back of mounting fears that a slowdown in Chinese growth reduces the country’s appetite for raw material such as iron ore which is used to make steel.
Beijing this week reduced the country’s annual growth forecast to 7% from last year’s goal of about 7.5% and actual growth of 7.4%.
At the same time, the improving US economy on the back of upcoming monetary tightening and strong labour market continues to bode well for the greenback, raising the value of the currency, which is often pegged to major commodities like gold and silver.
Late on Thursday, the price of iron-ore fell 4.5% to $59.30 a metric ton, according to data provider The Steel Index - the lowest level since March 2009, when it hit $59.10 a ton.
Unsurprisingly, it was Australia’s national index and its listed miners that felt the heat of the slump in iron ore prices. The S&P/ASX 200 fell 0.6% during the Friday session though pared losses to trade broadly flat. Mining stocks such as Rio Tinto and BHP Billiton, both dual listed with shares in London and Sydney, bore the brunt of the weakness.
China’s downgraded economic forecasts are a blow to miners like Rio Tinto and BHP Billiton who have been expanding their operations in the Pilbara iron-ore mining hub of northwest Australia on hopes that China consumes commodities to build more infrastructures. That’s resulted in a glut in the market of increase iron ore supply but reduced demand for the material.
Other commodities declined in the European session. By midday in London, the price of silver fell by 0.6% to trade at $16.07 a troy ounce while spot gold fell 0.2% at $1,196 a troy ounce, below the psychologically important $1,200 mark.
On London’s FTSE 100 index, which is heavily weighted by mining shares, Fresnillo slumped 1.7% to 723p, Rio Tinto dropped 1.5% to 2938p, Anglo American lost 1147p, Randgold Resources shed 1.2% to 4773p and KAZ Minerals tumbled by 1% to 229p.