Isra-Mart srl: Mining stocks continue to fall

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Mining stocks continued to fall on Friday as the underlying pessimism about the global economic outlook continued to weigh on sentiment, even as industrial metals prices held steady.

Trading of base metals was light ahead of London Metal Exchange week, which starts on Monday, and copper for three month delivery on the LME was trading up 0.2 per cent at $7,190 per tonne and aluminium rose 0.5 per cent to $2,254 in European midday trading.

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However, miners failed to shake off the weakness, with BHP Billiton, the leading mining firm, down 2.1 per cent to £17.28, Rio Tinto sliding 2.1 per cent to £29.05 and Anglo American losing 3.2 per cent to £22.19. Glencore, the trading house fell below 400p, down 2.4 per cent to 399.45p.

Some analysts believe that with steel equities falling over the past few days, pricing in a sharp downturn, bulk commodities, such as iron ore whose prices have held up, could follow stocks downwards. “If demand falls off then iron ore will not hold up,” said Credit Suisse in its latest report on steel, metals and mining.

While industrial metals have priced in global growth expectations, analysts said the commodities prices have not priced in the pessimistic view held by equities investors. Nevertheless, some investment banks have been downgrading their metal price forecasts to reflect the weaker demand outlook and collapse in sentiment.

Barclays Capital lowered its 2011 copper price forecast to $8,946 a metric from $10,321 a ton a month ago, adjusting its copper demand growth in 2011 from 3.1 per cent to 1 per cent and that of 2012 from 2.5 per cent to 1 per cent. An easing of interest rates in China would provide a positive boost for prices, there were “very real concerns over the event sin Europe and the implications that will have for export demand,” it said.