By Barry FitzGerald
FAR away from the anguish of Europe's debt contagion, the Chinese economy has been chugging along nicely - much to the relief of the resource sector, which has its fortunes tied to the ''hungry dragon''.
Confirmation on Wednesday night of an easing of inflation pressures on the mainland was good news for the commodities producers as it opened a window for Beijing to consider selective easing policies to offset weakening external demand.
And China's growth data presented what HSBC economists described as a ''picture of resilience'' in October. ''China is likely to see a growth slowdown, not meltdown, in the coming months,'' HSBC said.
That is consistent with the 7-9 per cent economic growth that the big miners have been tipping for China - down certainly, but none too shabby, and confirming a continuing healthy appetite for commodities.
The positive economic data out of China underpinned strength in commodity prices early yesterday. But that was before the wall of fear on Europe's spreading debt woes hit global equity markets.
Commodity prices followed the equity markets, with copper - the metal that best reflects where the market thinks the global economy is going - tumbling 2.3 per cent to $US3.37 ($A3.28) a pound in the US market.
Aluminium shed a lesser 0.75 per cent to US93.38¢ a pound. Its recent slide - it is down from last year's average of US99¢ - is a big worry as it is estimated that as much as 40 per cent of global industry would be losing money at these levels.
The rest of the exchange-traded metals also had a bad day. Zinc plunged 3.4 per cent to US84.42¢ a pound and lead tumbled 2.8 per cent to US85.73¢ a pound.
Nickel, like aluminium, has also become a worry, given that its fall from its 2010 average of $US9.89 to $US8.16 a pound raises question marks on the ability of as much as 15 per cent of the global industry to keep producing.
In the more ''real'' world of trade in the bulk commodities of iron ore and coal, where speculative money does not rule the roost, there was no instant damage.
Iron ore and coal have both weakened in recent weeks - iron ore by more than 30 per cent - but they have bottomed out at levels that by historical standards guarantee the miners can continue to make money hand over fist.
Still, none of that was enough to protect the share prices of the miners yesterday. BHP shares fell 2.2 per cent to $37.48 and Rio Tinto's lost 2.6 per cent of their value to close at $68.88.
Andrew Forrest took the biggest personal hit, with the 8 per cent fall in Fortescue Metals to $4.69 a share, reducing the value of his 31 per cent stake in the iron ore miner by $400 million.