The dollar copper metal price has collapsed from record peaks seen only three months ago; the world's biggest listed copper miner's price is down 66%.
The prices of listed resources stocks of all kinds started falling in and around May this year. This held for most listed copper miners as well, but for some months, the prices of listed copper miners fell disproportionately more than the underlying dollar copper price, which, indeed, peaked in July.
The cat is now out of the bag, given the precipitous fall in the dollar copper price over the past three weeks or so, in particular, and its fall by just under 50% from all time record highs seen in July this year.
A leading copper producer such as Antofagasta is now trading 64% off its stock price highs; its price has fallen 46% in the past month alone. Freeport-McMoRan, the world's biggest listed miner of copper, and also ranking as a Tier I gold producer in line with the substantial volume of its gold production, is 71% off its highs, and down by 66% in the past three months alone.
For months now, base metal specialists, such as those in and around the London Metal Exchange, have commented that copper prices have been trading at roughly twice the average cost of world production. Whatever the actual figures are, there has been a general sense that copper prices were in for a big fall.
Other base metal prices - with the ongoing exception of aluminium - started peaking from about two years ago. While copper is now 46% off its highs, aluminium, which peaked like copper in July this year, has fallen 35% to date. But while copper prices moved up over the past five years by roughly 400% to peaks, aluminum rose by little more than 100%. The longer term relative moves of prices for aluminium, of which some 40m tons is produced annually, and prices of copper (22m tons) suggests that far more speculative money moved into copper metal.
The entries into focused aluminium stocks are also somewhat limited. While investors can buy into Shenhua, which ranks as one of the top five most valuable mining names in the world, and Alcoa, a member of the 30-component Dow Jones Industrial Average, much of the world's aluminium output is under the control of diversified stocks such as Rio Tinto, BHP Billiton, and unlisted entities such as Rusal.
In line with the relative underperformance of the aluminium price during the six year so-called commodities supercycle, focused aluminium names have underperformed. Alcoa's stock price is now back to levels last seen in 1995. The economics of aluminium production is also heavily dependant on prices paid for electricity used in smelting.
By now, everyone knows about what's happening in global credit, equity, commodity and currency markets. At this point, a good number of listed copper miners are sitting with prices 80% off highs, and some more than 90%. Most names connected to copper production in the Democratic Republic of the Congo and/or Zambia have been particularly badly hit; First Quantum, the leading copper producer on the African continent, is 79% off its highs, leading a pack of names more than 80% down, such as Equinox, Camec, Katanga Mining and Anvil.
The prices for listed copper miners have fallen by an average of 76%, when measured on a weighted basis. The losses are similar to those sustained by the prices of listed miners of diamonds, silver, aluminium, uranium, zinc, tin, and nickel. Nickel stocks rank as the most heavily bludgeoned of the subsectors within global resources, at an average of 83% off highs.
