Mining stocks generally fell as copper prices showed their worst single-day performance since this year.
Zhitong Finance learned that on Wednesday, due to the worst one-day performance of copper prices since this year, McMoRan Copper (FCX.US) fell 6%, while Hudbay Minerals (HBM.US) and Southern Copper (SCCO.US) fell 8%, leading the decline in mining stocks. Ero Copper (ERO.US), TECK.US (TECK.US), and BHP.US (BHP.US) fell 5%, Rio Tinto and VALE.US (VALE.US) fell 2%, and the London Metal Exchange (LME) benchmark copper futures fell 3.8% to $10,412.50 per ton. Earlier in the intraday period, the price of copper surged to a record high of $11,104.50 per ton; the price of copper has risen nearly 22% so far this year.
Concerns about long-term supply and expectations of rising demand are one of the many explanations for the rise in copper prices, but the latest data from the International Copper Research Organization in February showed that the market is still oversupplied, which prompted Commerzbank analysts to be wary of any potential upside.
Earlier, Goldman Sachs said that the latest order survey showed that copper demand was weaker than expected. As copper prices soared, demand slowed down, starting in April and further intensifying in May, mainly due to order delays and scale contraction. Goldman Sachs believes that the current situation may be similar to the second quarter of 2021. Too high copper prices may be adjusted to embark on a more moderate and sustainable upward path.
Chris Beauchamp, IG's chief market analyst, said: “Investment funds have poured into the market over the past few months and performed well, but profit returns are finally beginning to show.”