BHP Billiton spin-off South32, which launched on the sharemarket with high hopes in May, tumbled to a new low on the ASX today amid a global commodity crunch, with shares down more than 30 per cent from their high point shortly after listing.
The diversified miner (S32), which holds BHP’s former non-core coal and base metal assets, has been hit by weak commodity prices and soft global demand amid a rising US dollar.
The shares, which hit a peak of $2.37 after listing, fell as much as 3.4 per cent to $1.56 in today’s trade, taking the total decline from the posting-listing high to 34 per cent.
South32, a miner of metals such as nickel, coal, silver, aluminium and zinc, has seen commodity prices crash during its short life. Bloomberg’s commodities index slumped to its lowest point in 13 years recently.
The prices of nickel, copper and zinc are all hitting their lowest points since 2009, as concerns about slowing economic growth in China are pushing industrial metals down.
IG market strategist Evan Lucas today said the 2009 slump in prices was based on the fear that there would be a collapse in global liquidity, which would lead to a grinding halt in demand for industrial metals.
“Now, however, with the sustained ramp up in supply coupled with sluggish demand from the world’s second largest economy, a price collapse is imminent,” Mr Lucas said.
South32 was “the stock to watch” in response to the collapse in nickel, he said recently.
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