SergeyZavalnyuk
The S&P 500 (SP500) closed the week in red with the materials sector up +3.34% and the Materials Select Sector SPDR ETF (XLB) +3.36%.
Although the sector rallied, metals had a tough five-day trading session. Iron ore prices (SCO:COM) skidded to their lowest in more than two years Thursday on mounting concerns over global steel demand, as tighter monetary policy and Europe’s energy crisis weigh on major economies.
“A bleak economic outlook and challenges in China’s property market do not bode well for bulk commodities,” analysts at Australia & New Zealand Banking Group said.
Meanwhile, copper futures (HG1:COM) on the London Metal Exchange fell 1.9% to $7617 per ton after touching the highest in nearly three weeks earlier in the week as the the dollar strengthened and China reported more coronavirus cases and renewed lockdowns.
However, the metal’s critical role in the clean energy transition and a coming supply crunch will support strong demand and prices according to SA contributor Tom Cunningham.
Take a look at this week’s top gainers among basic material stocks ($2B market cap or more):
- Quaker Chemical (KWR) +13.75%
- Olin (OLN) +9.74%; Olin posted higher-than-expected Q3 earnings.
- Enviva (EVA) +8.53%
- WD-40 Company (WDFC) +8.22%; Shares continue to slip as bleak annual guidance coming in with declining fourth quarter’s margins spooked investors.
- Boise Cascade (BCC) +8.12%; Boise raised its dividend this week to $0.15/share.
Here are the top losers among basic material stocks ($2B market cap or more):
- Cleveland-Cliffs (CLF) -15.67%; Shares dropped after reporting plunging Q3 profits and rising costs while failing to ease concerns that steel demand is in free-fall.
- Companhia Siderurgica Nacional (SID) -10.98%
- Teck Resources (TECK) -9.73%; The miner saw a freefall after a Q3 GAAP loss and the sale of its stake in the Fort Hills oil sands project, which triggered a C$952M impairment charge.
- Vale (VALE) -8.14%;The firm said its Q3 net profit was hit by a sharp decline in iron ore prices and lingering inflation.
- LyondellBasell Industries (LYB) -5.27%; The chemicals maker missed Q3 profit and revenue estimates as it battled with high energy prices and weak demand.
Other materials ETFs to watch: iShares Global Timber & Forestry ETF (WOOD), Materials Select Sector SPDR ETF, Vanguard Materials ETF (VAW), iShares Global Materials ETF (MXI), SPDR S&P Metals and Mining ETF (XME), VanEck Vectors Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), Global X Copper Miners ETF (COPX).
