Mining stocks rally as iron ore price surges 7% = Massive Recovery
Across the board gains on hopes of renewed Chinese metals demand
Frik Els | about 3 hours ago | 419 | 0
Investors piled into to the metals and mining sector in a big way on Monday after a strong start to the Chinese new year commodities demand and
a rally on the country's stock markets.
On the Comex market in New York copper for delivery in May climbed 2.5% to $2.1325 a pound or $4,700 a tonne. The red metal is up more than 10% from a six-year low hit mid-December. Other industrial metals also gained led by zinc which rose to a four-month high of $1,790 a tonne on Monday, aluminum gained 1.6% to $1,574 while nickel climbed more than 2% to $8,755 a tonne on the LME. Nickel was last year's worst performing metal with a 40% decline but has recovered 7% from multi-year lows struck in November.
Iron ore was the bigger winner on the day with The benchmark price of iron ore continued its rebound surging 7% on Monday to retake the $50 a tonne level. At $50.30, iron ore is up a stunning 36% from near decade lows hit December 11. Chinese steel prices hit the highest levels since September on Monday thanks to a seasonal pick-up in demand and as Beijing tackles problems in the country's construction sector.
The surge in US benchmark oil price underpinned the positive mood in the sector after crude surged more than 7% to $31.75 a barrel. A more than 20% rise from near 13-year lows barely two weeks ago is convincing that deflation in the commodities sector may finally be at an end.
Iron ore and copper are seen as bellwethers for the sector and the brighter prospects convinced some investors that the sell-off in mining stocks had been overdone. There was a broad advance among mining's heavyweights led by Freeport McMoran and Teck Resources – both miners also have exposure to oil. Two of the biggest losers of 2015 – Glencore and Anglo-American – also continued to make strong gains.
Freeport-McMoRan (NYSE:FCX), which vies with Chile's state-owned Codelco as the world's number one copper miner in terms of output, rocketed 13.8%. Volumes were simply massive with more than 52 million shares changing hands by lunchtime, making it by far
the most actively traded stock on the New York Stock Exchange. The Phoenix-based company, now worth $8.6 billion also benefitted from the stronger oil price – each $5 rise in the crude prices adds $170 million to its
operating cash flow, while a $0.10 change in the copper price adds $350 million. Year to date Freeport is up 14.3%.
http://www.mining.com/mining-stocks-rally-copper-jumps-iron-ore-price-surges-7/
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