Glencore – a giant falls to its knee

Glencore has taken a decision to sell its assets and raise equities as much as $2.5 billion to curb its massive debt by 2016.

Those familiar with Swiss commodity giant Glencore knows that for years it has been giant of giants in commodity space and its fall signifies how hard has the commodity producers' been hit by massive drop in prices and weakness in China. Glencore's share has lost almost 2/3rd of its value in past 12 months.

If the giant is considering asset sell offs at a time when commodity prices are at multi-year low, shows fragile nature of the industry, how other players both small and large could be in similar positions. Commodities recovery might take much longer time than estimated by analysts.

Today, on the trading front, Glencore's decision to close down its copper mines in Africa has provided some boost to copper prices, thanks to short covering. Copper is currently trading at $2.34/pound, up 0.9% today, it traded as high as $2.36/pound.

Analyst's estimate Glencore's move to reduce copper production is likely to reduce imbalance in the market as it would take away as much as 400,000 tons out of the market by 2016.