“A zinc output cut from Glencore drove metal prices higher while dovish Fed minutes caused a drop in the dollar, increasing the value of commodities”, said Lawler.
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Commodities headed for the biggest weekly advance since 2012 as Pacific Investment Management Co. said the worst of the collapse is probably over, helping mining companies surge and Glencore Plc double from its record low set last month.
It says it wants to keep its reserves in the ground amid prices that “do not correctly value the scarce nature of our resources”.
“The cut is certainly significant and swings the zinc market into a deficit for 2016, which we estimate will now be around 300,000 tonnes, a reversal of the 180,000 tonne surplus we were forecasting earlier”, analyst Edward Meir at INTL FCSTone said in a note. It had previously expected to produce between 1.52 million tonnes and 1.57 million tonnes of zinc this year.
Glencore added that it remained positive about the medium and long term outlook for zinc, lead and silver prices.
In light of the oversupply dogging the market, Accendo Markets research chief Mike van Dulken hailed Glencore’s move, which he said was “designed to restrict market supply and help put a floor under prices which have fallen to five-year-lows”. Aluminum company Alcoa shares were down 5.4 percent following disappointing results.
Operations at the Lady Loretta mine, in Queensland’s north west, will be suspended and production reduced at Mount Isa’s George Fisher Mine and the McArthur River mine in the Northern Territory.
Glencore has slashed its production of zinc sending its shares soaring 12pc as it rolls out more measures to retune its business for a prolonged slump in commodities markets.
The loss of 470 jobs at Glencore’s zinc mines in north-west Queensland is a temporary, but unfortunate setback for a minerals province with strong potential for the future. The selling pressure has accentuated in recent weeks as investors fretted over the impact of falling commodity prices on earnings and the company’s ability to meet its debt repayments amid low commodity prices.
USA crude prices (http://www.marketwatch.com/story/oil-atop-50-as-dollar-falls-market-eyes-possible-producer- collaboration-2015-10-09) pushed further past $50 a barrel, after tapping that level on Thursday, and related stocks responded to oil’s strength.
Glencore plans to shed up to 535 jobs at its Australian operations as part of a global reduction.
Three month zinc on the London Metal Exchange jumped 4.1% to $1,736 a tonne.
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Shares in commodities group Glencore rose strongly Friday after the company said it is slashing its zinc production by a third and cutting jobs in response to sharp fall in the price of the metal. It mentioned that it was a thoughtful decision and hasn’t been taken lightly.
