Key Asian mining markets are being thrown into crisis by China's slowdown and industrial reforms, with coal prices falling this week to levels last seen before the global financial crisis.
Benchmark Australian coal settled below US$60 a t, the lowest price since before 2008/2009. Coal has slumped 60% since a 2011 peak, when severe floods shut down mines in Australia and the Fukushima nuclear reactor meltdown in Japan pushed up global energy prices.
The drop has hit miners, including majors such as BHP Billiton, Rio Tinto, Glencore, Vale and Fortescue.
China relies on coal for almost 70% of its energy needs. Its coal demand fell last year for the first time in decades as the government gets tough in its declared "war on pollution".
Commodities brokerage Marex Spectron said China's current industrial overcapacity is a hangover of the government-directed stimulus during the 2008/2009 crisis. Barclays said the outlook will remain weak as Beijing engineers an economic transition to a less investment-driven, more consumer-led economy: "The consensus view is that this will lead to a slowing of demand for almost all commodities."
Edited from source by Joseph Green
Source: Reuters