A surge in base metals prices on Friday on the back of good economic news in the US, monetary stimulus in the EU and better prospects for a pick-up in Chinese growth, led to a rally among the world's largest miners.
The better than expected US jobless figures out early Friday built on gains sparked by the EU cutting interest yesterday, but a growing consensus that the sell-off in commodities over growth fears in China may have been overblown did the most to buoy the sector.
China has been the main driving force of the so-called commodity supercycle of the last decade and forecasts of tepid growth in the country has made commodity investors nervous this year.
But recent numbers from the world's second largest economy suggest a brighter outlook:
- Electricity consumption growth which many believe may be a better indicator of economic expansion than China's official GDP figures (which are open to manipulation by politicians) is set to accelerate to as much as 8.5% growth year on year.
- The country's steel industry – a proxy for the health of the country's infrastructure investment dependent economy – has upped crude steel output 9% this year against forecasts of 4%–5% growth
- Land sale revenues have soared this year with plots in China's 306 largest cities fetching 84% more than last year while for the 240 so-called top tier cities registering a 282% rise.
China dominates the global trade in just about every commodity including iron ore (representing over 60% of world trade), copper (42%), coal (47%), nickel (36%), lead (44%) and zinc (41%).
The spot copper price surged almost 7% in heavy volumes to change hands at $3.31 a pound or just under $7,300 a tonne on Friday, bouncing back strongly from 18-month lows set on Wednesday while lead, tin and nickel also gained.
The stronger metals prices fed through to mining stocks with the diversified majors making strong gains without exception.
World number one miner BHP Billiton (LON:BHP) jumped 2.9%, Brazil's Vale (NYSE:VALE) added over 2%, while Rio Tinto (LON:RIO) climbed 4.2%.
Newly merged Glencore Xstrata (LON:GLEN) had a positive first day of trading, ending up 1.3% after earlier jumping as much as 3.3% affording what is now the world's number four miner a $70 billion market value.
Anglo American (LON:AAL) shares moved 4.3% for the better, while Canada's Teck Resources (TSX:TCK) managed a more modest gain of 3%.
Copper giant Freeport-McMoRan (NYSE:FCX) added 2.7% after workers ended a three-day strike at its flagship Grasberg mine in Indonesia.
Southern Copper Corp (NYSE:SCCO) was a major gainer, up 4.5% while fellow South American copper producer Antofagasta (LON:ANTO) was the top performer, jumping 7.6%. Beaten down ENRC (LON:ENRC) also increased its value, bouncing 5.7%.
While iron ore continued to drift lower with benchmark 62% fines at the Chinese port of Tianjin ending the week below $130 for the first time since December, iron ore stocks also got in on the action.
ADRs of South Africa's Kumba Iron Ore (NYSE:KIROY) was unchanged in New York, but Fortescue Metals Group (ASX:FMG) of Australia, US-based Cliffs Natural Resources and Ukraine's Ferrexpo (LON:FXPO) climbed 5.5%, 3.9% and 6.2% respectively.
World number one uranium miner Cameco Corporation (TSE:CCO) added 2.2% despite a uranium price languishing in the low $40s.
Precious metals trading was noticeably more subdued with gold for June delivery ending flat for the week at $1,464 an ounce on the Comex division of the New York Mercantile Exchange. July silver ended the week slightly lower at $24.10 an ounce.
Newmont Mining Corp's shares traded up 1% thanks to the US-based miner's relatively high exposure to copper, global number one Barrick Gold Corp added 2.2%, but is still down more than 40% since the start of the year while fellow Canadian gold counters Goldcorp (TSX:G) and Kinross Gold (TSX:K) were both static.
AngloGold Ashanti (NYSE:AU) fell less than a percent, but Johannesburg-peer Harmony Gold (NYSE:HMY) was hammered down 9.6%.