Base Metals Register High Price at London Metal Exchage


Published Date : Feb 03, 2016

Surging demand for energy and rising urbanization has boosted the global base metals mining market. While base metals are essential across the manufacturing sector, a large number of applications of base metals are in the production of electrical systems, durable goods, automotive systems and coatings, and others. However, fluctuating prices of base metals are expected to negatively impact the global base metals mining market. Low prices of base metals lead to mining companies sitting on piles of base metals with no takers across the market. This leads to falling share prices of the mining companies.

Fluctuating Prices Kill Profit of Mining Companies

The recent plunge in commodity prices in January this year led many mining companies to sell assets or metal streams to boost their liquidity. Analysts had predicted that if the prices continued to remain low, creating liquidity would be a very tough task for the mining companies. The mining companies are forced into liquidity issues amid falling share prices to support their balance sheets. Before considering diluting equity offerings, miners usually cut their capital spending and sell more assets. For example, though HudBay Minerals Inc. and First Quantum Minerals Ltd. have enough liquidity to survive through the end of 2017 at current prices of commodity, according to market watchers, both these firms could face problems without any concrete action. 

Zinc Registers Three-Month High Price at London Metal Exchange

This week, at the London Metal Exchange, most industrial metals witnessed comparatively high prices. 

  • Zinc rose to a three-month high price. Last year, the value of the metal fell down by 26% owing to the economic slump in China that reduced the demand for base metals and prompted companies to shut down their production. With extensive production cuts, a huge supply deficit across the global zinc market is expected. 
  • Copper gained 1% to US$4592.50 per ton in London.
  • The prices of aluminium, nickel, and lead have also increased.