SA mining stocks sink

Photo: Siphiwe Sibeko

Photo: Siphiwe Sibeko

Published Aug 4, 2015

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Johannesburg - South African commodity stocks, including Kumba Iron Ore and Impala Platinum Holdings, sank to multi-year lows as metal prices tumbled.

Kumba, a unit of London-based Anglo American, led declines on the FTSE JSE Africa All Share Index, dropped as much as 7.1 percent to an all time low.

Royal Bafokeng Platinum slid 5.1 percent. AngloGold Ashanti, the continent’s biggest producer of the metal, fell as much as 2.7 percent to a record.

All 11 of the most active securities trading at 52 week lows on the Johannesburg Stock Exchange were resource-related.

Commodity prices have slumped to their weakest levels in 13 years with excess supplies emerging in everything from oil to metals and crops, while the dollar near the highest levels since March is making raw materials more expensive for buyers in other currencies.

Copper is set to join zinc, aluminum, nickel, lead and tin in a bear market as a slowdown in China, the largest consumer of raw materials, threatens to dent demand.

“The commodities slump will be prolonged as long as there’s dollar strength,” Rob Pietropaolo, a trader at Vunani Private Clients, said by phone from Johannesburg.

“There’s an oil glut, a platinum glut, a steel glut and there’s no inflation to counter gold. Everything together, if you take the slowdown and the stronger dollar, bodes very badly for commodities in the medium- to long-term. You need growth for commodities to go up.”

Platinum on Tuesday weakened to the lowest level since January 2009 as output in South Africa, the largest producer, improved, while gold is trading near a five-year low.

The FTSE/JSE Africa Gold Index declined as much as 2.6 percent to the lowest since December 2000 with all but two of its five members dropping.

The six-member FTSE/JSE Africa Platinum Index slid to the worst level since May 2003, with Impala, the world’s second-biggest producer of the metal, losing 1.8 percent to its lowest since November 2001.

BLOOMBERG

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