GLEN Glencore Plc

The troubles of commodities giant Glencore PLC are benefiting global markets as the company shuts down its supply of many actively traded commodities from zinc to copper, sparking rallies in these resources.

The gains, however, are often short lived, with investors soon returning to the view that most commodity markets are oversupplied at a time when demand is falling. For Glencore's actions to have a lasting effect, other miners must follow. But many analysts believe that this won't happen in a way big enough to push prices higher in an era when China, the world's biggest consumer of most mined commodities, is slowing down.

"Glencore's announcement will not be sufficient to engineer a major turnaround in sentiment towards base metals or indeed mining firms," said Sebastien Marlier, a commodities analyst at the Economist Intelligence Unit.

Glencore said Friday it will cut annual zinc production by roughly a third, or 500,000 metric tons, including closing two mines. That is the equivalent of roughly 4% of the market in a metal primarily used in steel production. The changes will also reduce its annual output of lead, which is produced at those mines, by about 100,000 tons.

The news sent the price of zinc up by 11.4% to a two-month high of $1,857.50. Lead climbed 7% to a three-month high, before settling up 5.4% at $1,763. The news boosted other industrial metals, all of which traded higher throughout Friday.

The mine closures are the latest in a string of cuts from Glencore, including coal, copper, platinum and cobalt, as sliding commodity prices make it harder for the company to turn a profit and reduce its $30 billion debt burden. The announcement comes at a time when Glencore has been under scrutiny by investors, concerned that falling raw-material prices could strain the mining and commodity-trading group's finances.

The company's share price closed up 7% at 129.10 pence.

Some market participants see these cuts as a marker in an important shift in sentiment among major producers and a signal that the market was waking up to the high levels of oversupply faced by many commodity markets. According to Macquarie, five of the six major metals will have a surplus this year. Aluminum producers will oversupply their market by 2.8%, the most of all metals.

Most analysts argue that more cuts need to follow to make a fundamental difference in prices.

Last month, Glencore said that it will shut down two money-losing copper mines in Africa for 18 months, taking more than 1% of global output off markets. That sent copper prices spiking by around 4%, but the metal soon sank and is now trading at around the same levels it was before Glencore's announcement.

There have been cuts by smaller miners in commodities such as coal and copper. But Freeport-McMoRan Inc. has been one of the few other big miners to reduce output, announcing in August that it was cutting about 68,000 tons from its annual copper production over the next two years.

Many of the major miners, like Rio Tinto PLC and BHP Billiton Ltd., have so far resisted joining the cuts, including in the coal market that Glencore is active in and which has seen significant price declines.

"[The] Glencore cuts tell you where it was losing money," said Hunter Hillcoat, a commodities analyst at Investec. "While the coal prices impact BHP and Rio as well, their assets are generally higher quality, and therefore they've no need to cut production."

In other words, some of these larger miners are unlikely to cutback because they can often still make money. Giants like BHP and Rio also have held back to see if the pressure of low prices would force smaller, higher-cost mining outfits out of business, analysts said.

Now analysts are scouring Glencore's portfolio to see what else can be cut.

In commodities markets as a whole, nickel is seen as one of the metals that miners need to tighten the most. Only 25% of production in this metal, which is used in the production of stainless steel, is profitable, said Ben Davis, analyst at Liberum Capital.

Underscoring the difficulties of balancing global supply and demand, a cut to aluminum production by its biggest miners could only encourage Chinese suppliers to plug the gap as they continue to expand capacity.

For all commodities, whether supply is cut or not, China will have a say on the end price, given its outsize role in demand.

China accounts for nearly half of total global zinc consumption, 45% of global copper consumption and 40% of lead production. Fears about China's slowing economy in recent months have been a major factor in the recent commodity price weakness. After years of double-digit expansion and despite a series of economic interventions by the government, the country is struggling to maintain a 7% economic growth rate.

"If demand does not increase, then it would be tough for…prices to sustain the momentum," said Daniel Ang, an analyst at Phillip Futures.

Rhiannon Hoyle contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com and Alex MacDonald at alex.macdonald@wsj.com

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(END) Dow Jones Newswires

October 09, 2015 13:55 ET (17:55 GMT)

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