Mining shares and most metals prices jogged higher on Thursday on tentative recovery signs from the United States and China, but output shutdowns in aluminium and weak copper demand in Japan suggested a full rebound may be distant. Mining shares were some of the biggest gainers on the London stock exchange, including Rio Tinto, whose finance director reckoned that the crash in metals prices may have nearly run its course.
Rio shares in London climbed 5.3 percent while Kazakh mining group ENRC surged 12.1 percent by 1340 GMT, making it the top gainer in the blue chip FTSE 100 index. "There is a case, you can believe, for a recovery in the second half," Guy Elliott told a mining conference in Singapore. "We are not far away from the bottom. "We cannot expect that metal prices and other indicators are going to be immune from such a huge effort that the governments are making, particularly in China, but also in the US"
His comments about Chinas infrastructure investment, together with a rise in US durable goods orders and a jump in new home sales, helped boost copper prices by 3 percent. Aluminium ticked higher while zinc touched its highest level since early January. Small miner Central African Mining & Exploration Company said signs of a rebound had spurred it to restart cobalt mining operations in Congo, sending its shares rocketing 33 percent.
After widespread shutdowns by cobalt producers, inventories have fallen and demand was beginning to show signs of recovery, the firm said. Many investors were wary of assuming too much from the scattered signs of possible recovery after dizzying price falls of 60-90 percent after demand fell off a cliff.
"We are slightly cautious as there is little sign of a recovery in demand for regions outside China other than the rare piece of good news from the US over durable goods and housing," said Fairfax analyst John Meyer in a note, referring to copper. "It is still early days." The caution was reinforced by news from Japan, the worlds No 4 copper consumer, that the countrys demand for copper wire and cables is expected to sink to its lowest in 34 years in the next business year.
Data showed production of rolled copper products dived nearly 60 percent from last year - the biggest ever fall - and officials said no end was in sight to the decline. More gloomy news came from Norway, where aluminium group Norsk Hydro unveiled another cut in metal output due to a weak market.
It will slash production at its Sunndal smelter in Norway by 100,000 tonnes, bringing total curtailments to a half a million tonnes. Lower coal production at the worlds largest mining group, BHP Billiton, led to 400 more job cuts, on top of 1,100 jobs lost earlier this year, a trade union said.
A bleak outlook about the market for nickel, widely used in stainless steel, came from Australias Metallica Minerals, which said it had no plans to resume work on a mine due to low prices. A ballooning nickel surplus - more than 100,000 tonnes or one-tenth of annual global consumption sits in London Metal Exchange warehouses - was undermining attempts by suppliers to bring the market into balance, Managing Director Andrew Gillies told Reuters in an interview.
Despite the downturn and credit crunch, however, some companies are managing to raise finance. BHP sold 2.25 billion euros ($3.06 billion) in three- and seven-year bonds to more than 575 investors, a source familiar with the details of the issue told Reuters.
BHP has raised a total of $6.3 billion in bonds in the past week, including a separate $3.25 billion issue. The worlds fourth biggest platinum producer, Aquarius Platinum Ltd said it plans to raise up to $251 million in a share placing, rights issue and convertible bond issue to pay off a bridge loan and fund operating expenses.