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Investing.com– Australian shares of BHP Group Ltd (ASX:BHP) and Rio Tinto Ltd (ASX:RIO), the biggest miners in the world, fell sharply on Monday after China signaled that it will not soften its zero-COVID policy, potentially indicating more headwinds for commodity markets.
Shares of both firms slipped about 3% each, while the S&P/ASX 200 benchmark index dropped over 1%. China is a major market for their copper and iron ore exports, and saw a sharp drop in demand this year as a series of COVID-linked curbs disrupted economic activity.
President Xi Jinping said on Sunday that Beijing has no intention of reversing strict anti-COVID measures, a move that could spell more economic headwinds for the country. His comments, which were made at the 20th National Congress of the Chinese Communist Party, also come as new COVID outbreaks in Shanghai invited fresh curbs in China’s financial capital.
While BHP and Rio have so far this year logged steady earnings on sales to China, both miners warned that an extended slowdown in the Chinese economy is likely to impact commodity markets.
Focus now turns to production reports from the two miners for the three months to September 30, which are due later this week.
Rio Tinto is set to report quarterly production on Tuesday. Focus will be on whether the world’s largest iron ore miner was able to maintain steady growth in shipments despite slowing economic activity in its biggest market.
The firm had logged weaker financial results for the first half of the year, even cutting its dividend in July. Chief Executive Jakob Stausholm also warned that copper demand may weaken in the near-term due to slowing economic growth across the globe.
Still, Rio expects to ship between 320 and 335 million tons of iron ore in 2022.
BHP Group, the world’s largest miner, is set to release production figures this Wednesday. With China accounting for about 60% of BHP’s total revenue, focus will be on whether the firm was able to weather a slowdown in the mainland.
The firm expects its West Australian iron ore operations, its biggest producer of the steelmaking material, to produce over 300 million tons of iron ore in the medium-term.
