BHP Billiton Ltd. and Alumina Ltd. led declines in commodity stocks on concern the deepening global credit crisis will slash demand for metals.
BHP, the largest mining company, slipped to the lowest since May last year. Alumina, partner in the world's biggest producer of the material used to make aluminum, fell to the lowest in more than nine years. Rio Tinto Group, the world's second-biggest aluminum producer, slumped to a 14-month low of A$80.71 on the Australian Stock Exchange.
Copper dropped the most in four years in London and aluminum slumped to almost a three-year low as the credit crisis deepens. Commodities markets are heading for the biggest annual decline since 2001 as investors exit leveraged bets and slowing economic growth erodes demand for raw materials.
``People are thinking we will see a recession in the U.S. and Europe and that will have a knock-on effect on the demand for product from China with the U.S. being its biggest customer,'' said Oliver Stevens, head of dealing at IG Markets in Melbourne. ``People are de-leveraging out of these commodity stocks. People are getting into cash.''
Rio's London-traded shares fell by the most in 20 years yesterday. BHP, trying to buy Rio in a hostile takeover, has declined 32 percent since the end of June and Rio has fallen 38 percent.
The value of BHP's all-stock offer has more than halved from a high of $194 billion in May to $86 billion yesterday. Rio shares are trading at a 23 percent discount, widened from 17.8 percent on Friday, signaling concern amongst investors the bid may fail.
Alumina fell as much as 13 percent to A$2.65. That's the lowest intraday price since February 1999.
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