Boom’s longevity questioned following weak statistics

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Recent drops in iron ore and coal shipments and sliding commodity prices have mining analysts questioning how long the mining boom will last.

According to data from the Australian Bureau of Statistics iron ore exports fell two per cent in September, hard coking coal fell eight per cent, and thermal coal dropped seven per cent.

And while the September trade surplus of $2.6 billion was still very strong, it was almost $400 million below the previous month.

Deutsche Bank economists Adam Boyton and Phil O’Donaghoe said in a note the figures had analysts questioning how long the mining boom would sustain.

“The real question for us is how long ‘mining boom mark II’ as symbolised by these very large surpluses might be sustained,” they said.

“Recent falls in key commodity prices such as iron ore are likely to weigh on the trade surplus in coming months.”

Last week the Reserve Bank of Australia’s latest quarterly statement indicated continuing drops mineral prices.

Iron ore prices were down 34 per cent since the previous statement and 20 per cent for the year.

But despite the long term falls prices have rallied over the past few days, indicating the steel-making ingredient may have seen its lows for the cycle.

While suffering a rough quarter the RBA figures for coal were still positive.

Coking coal was down 21 per cent for the quarter but had seen a six per cent gain for the year, and thermal coal was down one per cent for the quarter but had jumped 12 per cent over the year.

Almost all base metal prices have seen double digit losses from the previous quarter and over the past year.

However the European debt crisis continues to push gold higher, with the precious metal up eight per cent over the quarter and 29 per cent for the year.

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