Among other metals, lead fell 1.5 percent to $1,781.50 a tonne, while tin was broadly steady at $15,895. The supply cuts announced on Friday by Glencore Plc, which removed 500,000 metric tons, have improved the outlook, the bank said.
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With an investor day scheduled in the next month or so, at which the company is likely to update on its debt reduction plan, UBS reiterated its “buy” target and 240p 12-month price target, which is double the current price.
Glencore has said it would cut its “readily marketable inventories” by $1.5 billion and would reduce working capital by an additional $1.5 billion, partly from liquidating more inventories. Nickel dipped 1.6 percent to $10,485 per tonne.
London copper slipped on Wednesday for a second consecutive session, as doubts persisted over the economic health of China, the world’s top consumer of metals, but a boost to copper imports lent support to prices.
But there is a growing school of thought that the always cyclical mining sector will soon start to pick up.
You can’t say Glencore isn’t doing its bit to cut global overcapacity in base metals and bring the market into balance – although you shouldn’t mistake its actions for an altruistic motive, this is purely self preservation.
It said copper was at the bottom of the price cycle and it expected it to turn a corner by early 2016 when output contracts by 100,000 tonnes. Various reports say a few assets in Kazakhstan will also see output shrink.
A key drawback of this larger and more integrated role in commodity production is that lower commodity prices are now far less stimulative for China than they would have been several years ago.
That is despite a mammoth 440,000 tonnes of nickel stocks in LME warehouses in a 2-million-tonnes-a-year market.
Miners like David Moore of Mincor Resources are coping with price constraints by mothballing mines and laying off workers, but he still has an eye on the eventual recovery.
But overall, analysts expect demand growth to remain suppressed.
“We’re carrying out feasibility studies on new projects”.
Mr. Donskoy predicts that demand in the copper market will be flat this year and sees little, at present, that could push prices higher, given that supply is still excessive despite of a round of cuts from mining companies.
Some, like Peter Bradford from diversified mining company the Independence Group, said the potential for supply-demand deficits in zinc was why he was looking at future opportunities.
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“It can be a very unsafe game in the medium and long term”, he said.
