MARKET REPORT: China slams the brakes on the commodities boom

The commodities ‘super-cycle’ suffered a setback yesterday as China moved to slow down a metals price rally.

China plans to release some of its stockpiles of copper, aluminium and zinc to stabilise the surging market in raw materials, reports say. 

It has also urged domestic firms to curb commodity trading on overseas markets.

The commodities super-cycle has been in full swing since the start of the year as the global economy started recovering from the pandemic

It would be the first time in around a decade that China, the world’s largest metals consumer, had released reserves.

The commodities super-cycle is in full swing as the global economy recovers from the pandemic and governments plough money into infrastructure.

This and widespread promises to also spend big on green technologies, which require metals such as copper and lithium, have sent prices soaring and in some cases to record highs.

China’s caution comes from a fear that if the rally continues apace, higher prices will be passed on to consumers, which could threaten the country’s post-Covid revival. Zinc, tin and aluminium all dropped.

Stock Watch – Best of the Best

Best of the Best nosedived after it warned popularity was waning for its luxury car competitions since lockdowns began lifting.

The AIM-listed company offers people who pay to play its raffles the chance to win sports cars such as Ferraris, Rolex watches and holidays.

It is led by William Hindmarch, brother of the bag designer Anya Hindmarch.

The 27.8 per cent slump, which sent shares 730p lower to 1900p, came even though the company’s annual profits rocketed to £14million from £4.2million the year before.

The firm hiked its dividend to 5p, from 3p.  

At the same time copper floundered, falling to the lowest level in around two months, trading 4 per cent lower at $9,569.50 a ton. Unsurprisingly, this weighed on the FTSE 100 mining firms.

Anglo American sank 1.2 per cent, or 35.3p, to 2963.5p, Glencore by 1.2 per cent, or 3.95p, to 317.05p and Chilean copper group Antofagasta by 1 per cent, or 14.5p, to 1454p.

But the wider Footsie managed to shrug off these losses to close 0.2 per cent higher, up 12.47 points, to 7184.95. 

The FTSE 250, on the other hand, finished 0.1 per cent lower, down 14.06 points, to 22,167.66. 

Sainsbury’s and Ocado both traded higher after a Whitehall leak suggested long-term home working, or at least a hybrid element to the week, is here to stay.

Delivery specialist Ocado climbed 1.3 per cent, or 2.4p, to 1913.5p, after being a standout ‘lockdown winner’ last year. 

And although Sainsbury’s, which was 1.2 per cent, or 3p, up to 256.8p, suffered because of high Covid-related costs such as providing PPE in stores, food sales surged and a fourfold rise in online profits. But a separate Covid development knocked shares in landlords.

The Government has extended a ban on commercial evictions until March 2022, which was due to expire at the end of this month.

Hospitality and retail firms had pleaded with ministers for the extension, saying they would face spiralling debts, but it was another blow for landlords. Shopping centre owner British Land fell 1.2 per cent, or 3p, to 256.8p, rival Hammerson dipped 4.1 per cent, or 1.69p, to 39.68p, and Land Securities was down 1 per cent, or 0,1p, to 702.2p.

And West End and Covent Garden groups Shaftesbury (down 0.6 per cent, or 3.5p, to 600.5p) and Capital & Counties (1.3 per cent lower, down 2.2p, to 168.8p) also lost ground.

The DIY and home improvement trend has continued apace, says sofa store ScS, which has 100 stores in the UK. It hiked its outlook for this financial year and next after sites reopened.

Orders jumped 79 per cent between April and June 12 compared with 2019, ScS said, standing at around £117million. The stock was up 5.5 per cent, or 16p, to 306p.

Tullow Oil also saw a modest rise – it gained 0.9 per cent, or 0.58p, to 64.94p – after it said an improvement plan was delivering results and that it is making progress in Ghana and Kenya. 

The oil company, formerly a FTSE 250 constituent, has suffered a number of setbacks in recent years.

These began when a supposedly stellar oil find off the coast of Guyana turned out to be a type of oil that is difficult to process.

Over on AIM, car dealer Cambria Automobiles slid 1.2 per cent, or 1p, to 80p after agreeing to a takeover – a management buyout led by chief executive Mark Lavery. His offer of 66p values it at £80million.