Australian iron-ore miners are back under the spotlight as the latest price slide raises fresh doubts about the survival prospects of second-tier producers. With Chinese stock markets in free-fall, the price of iron-ore last Wednesday suffered its biggest one-day slide since The Steel Index began compiling records in late 2008. The 11.3% plunge knocked the mineral to a 10-year low of US$44.10 per metric tonne, before recovering to US$48.99 the following day. Credit markets punished all bar the biggest issuers on fears of falling Chinese demand. Bonds from fortescue metals group were among the hardest hit. "Default risk has increased at the lower end of the rating spectrum due to reduced cashflow and liquidity issues. Given the soft prices of most commodities, we expect this sector's earnings and cashflows to be weak," said S&P analyst May Zhong.
展开▼
