Commodity Selloff Erased A Combined Value of AUD16 Bil for Top 3 Oz Miners

Australia’s big three miners , namely Rio Tinto, BHP and Fortescue Metals, were on track to lose more than AUD16 billion in combined market value on Monday at current levels, as a commodities rout intensifies over easing China demand and fears of a global recession deepened.

For the past one week, the Australia’s All Ordinaries came tumbling down to fall below the 7,000 point-level. To be exactly, the All Ordinaries had fallen to the 6-month lowest of 6,609.50 point level yesterday. The mining big corporations are the main components of the index’s weightage. Rio Tinto’s shares were set to shed nearly A$2 billion in value, while BHP more than A$10 billion, and Fortescue Metals dropped over A$4 billion.

The Australian export is mainly prodded by the demand of China’s market, hence lower output from Chinese steel mills has hit demand for iron ore, while prices of commodities like copper and aluminium have slumped on worries that aggressive interest rate hikes by the U.S. Federal Reserve’s and other central banks could tip the global economy into a recession.

The three Australian mining behemoths, so far this month, have already lost roughly A$30 billion of their combined market value, and are facing a third straight week of losses after hitting multi-week lows on Monday.

Rio Tinto and BHP are trading at a one-month low, while Fortescue is at a three-month low.

Meanwhile, analysts at JP Morgan addressed the risks to the sector but said fresh policy support along with easing COVID-19 lockdowns in China would spur a rebound in the second half of 2022, and maintained their “neutral” view on Rio Tinto and BHP.

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