Global copper miners head for worst quarter since 2008

Copper miners are poised for their worst quarter since 2008 after the coronavirus pandemic fueled demand fears for industrial metals and forced companies to curb mining operations.

The BI Global Copper Competitive Peers index has slumped 37% this quarter, led by Teck Resources, Hudbay Minerals and Freeport-McMoRan, which are all down more than 50% so far this year.

The miners “are being hit from two sides,” said Daniel Briesemann, an analyst at Commerzbank AG, pointing to unprecedented disruptions to operations and supply chains and concerns about a global recession. Even with China’s back-to-work rate improving dramatically, “there’s still hardly any demand from the rest of the world.”

Miners, including those in Peru and Chile, the top copper producers, are being forced to halt or curtail production and processing. At least 17% of global copper supply is at risk from closures, according to Bloomberg Intelligence analyst Andrew Cosgrove. Caterpillar provided more evidence that global industrial activity is crumbling last week when the U.S. manufacturing said it was suspending some operations and pulling its 2020 financial outlook.

Copper for three-month delivery fell 0.4% to $4,771.50 a metric ton at 3:16 p.m. on the London Metal Exchange. Copper is heading for its worst quarter since September 2011.

Still, the tumbling prices may provide a buying opportunity for investors. UBS group AG recommends investors buy Americas copper producers as the firm sees one quarter of copper price weakness being “followed by six quarters of strength.” Analyst Andreas Bokkenheuser recommends buying Freeport, Southern Copper Corp. and Grupo Mexico.

(By Yvonne Yue Li)

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