The plunge in oil prices is beginning to ripple across sectors, pressuring industrial metal miners and related exchange traded funds.
The SPDR Metals & Mining ETF (NYSEArca: XME) fell 5.4% Wednesday and is down 28.2% over the past year. XME is now trading near its lowest since March 2009.
Global miners are not faring any better, with the iShares MSCI Global Metals & Mining Producers ETF (NYSEArca: PICK) down 5.1% Wednesday, dipping to an all-time low. PICK has decreased 18.6% over the past year. The ETF tracks global companies involved in the extraction and production of diversified metals, aluminum, steel and precious metals and minerals, except gold and silver, including big names like BHP Billiton (NYSE: BHP) 17.3%, RIO Tinto (NYSE: RIO) 8.4% and Glencore (OTC: GLNCY), which also fell to an all-time low.
Metals and mining stocks were falling off after Citigroup (NYSE: C) cut its 2015 and 2016 price targets on iron ore to $58 and $62, respectively, compared to previous forecasts of $65 for both years, reports Kristen Scholer for the Wall Street Journal.
“The industrial commodities are being in the midst of a deflationary spiral, driven by lower oil prices, falling fx and efficiency gains,” Citi’s research team said in a note. “This is lowering cost curves and support.”
For instance, COMEX copper futures continued their plunge Wednesday, falling 5.8% to $2.49 per pound, or about $5,500 per ton. [Copper Crush Crimps Chile ETF]