Mining Sectors Take a Hit

With the negative outlook of the Chinese market, the mining and resources sectors in Australia are feeling the strain as the stocks sunk its lowest today.

Despite the positive fourth-quarter production report from mining giant, BHP Billiton, the market still did not respond well. The iron ore division of BHP performed 10 percent more than what is expected, producing 40.9 million tons three months prior to June 30.

Furthermore, the Pilbara operations of BHP also performed well this past year, producing 174 million tons of iron ore.

Here’s a rundown of what happened in the mining sectors in the market today:

• Iron Ore price dropped below the US$130 per ton mark

• Shanghai steel is the lowest this year

• BHP lost two percent and closed at its lowest price since March 2009 at $30.18

• Rio lost more than three percent at its lowest price since July 2009 at $52.78

• Atlas lost more than three percent at its lowest price since May 2010

• Fortescue Metals Group lost more than 3 per cent and was downgraded to a “hold” rating by Deutsche Bank

• Santos company, an oil and gas producer, closed at its lowest price since October 2008

• In gold, Newcrest Mining dropped its lowest since November 2008 but quickly bounced back

• Uranium producer, Paladin Energy also hit the low marks since June 2005

According to UBS analyst, Glyn Lawcock, it is possible that next couple of months may be difficult for the mining sectors with steel production cuts that might take place.

Deutsche analyst Paul Young said the 174 million tons of iron ore produced by BHP’s Pilbara operation.