Copper fell below $4,500 a metric ton for the first time in six years and nickel touched the lowest in more than a decade on concern producers aren’t doing enough to trim a glut of metal.
The retreat in commodities helped send a gauge of mining companies to near the lowest in almost seven years. The London Metal Exchange’s index of six main contracts has slumped 27 percent this year, the most since the global financial crisis in 2008, as a slowdown in top user China cut demand.
Expectations that the Federal Reserve will soon raise U.S. interest rates has boosted the dollar and made metals more expensive for buyers holding other currencies.
At the same time, that’s lowering production costs of companies outside the U.S. and encouraging them to maintain output, according to T-Commodity, a Milan-based consultancy.
“Chinese demand is still weak,” Gianclaudio Torlizzi, a partner at T-Commodity, said by phone. “The bearish action is to force the local producers to cut production. What’s making people negative is the fact that the production costs of many metals has been holding pretty well.”
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