Mining companies sucked into Chinese stock market’s vortex

Workers remove the cloth covering the iron ore from Australia while they prepare for transporting at a port in Tianjin municipality March 29, 2010. REUTERS/Vincent Du (CHINA - Tags: BUSINESS POLITICS IMAGES OF THE DAY) - RTR2C80K

Workers prepare to unload Australian iron ore at the Chinese port of Tianjin

“This [China’s stock market turmoil] is more unwinding of the supercycle — there was a positive demand shock caused by China on the way up and now China is delivering negative demand shocks on the way down,” says David Butler, head of European metals and mining research at Barclays in London. “Institutional investors are extremely cautious and those that have been a bit more confident in recent months will be completely dismayed by what is going on . . . the volatility can only be inflicting serious permanent damage on funds’ desire to come into the sector.”

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