The price of gold has been soaring as global demand for the precious metal has surged, while commodities prices have plunged in the past month due to an economic slowdown in China.
This week, it emerged that a major Chinese producer of coal is selling its stake in a coal mining firm, the largest private sector buyer of coal in the world, to a Chinese firm.
The move by China’s biggest private sector miner, China National Offshore Oil Corp (CNOC), comes as it struggles to stem the mining boom.
It is the latest example of the country’s economy slowing down and a slump in the value of the yuan has also hit exports.
In an interview with Reuters news agency, the chief executive officer of the company, Xu Guofeng, said that he had already sold his shares in CNOC and that the company would be looking for a buyer.
“We are trying to sell a shareholding of the coal company and we are seeking a buyer,” Xu said.
The news comes after Chinese coal mining company CNOC was forced to shut down in September after losing millions of dollars in revenue from the Chinese economy, and it announced it would buy up coal mines in Australia and New Zealand.
The coal industry is the largest employer in China and employs almost 7 million people.
While it has enjoyed a boom in recent years, the mining industry is facing a slowdown due to the slowing economy and the fall in the currency.
“In terms of commodity markets, we have seen the fall of the price of coal, gold and silver and the price is still very high in some parts of the world,” said Peter Jardine, head of commodities research at the Australian National University.
“In the next three months, the Chinese government will need to do a lot of things to try and keep the coal industry going.”
However, a number of economists are warning of a “tipping point” in the price rise in commodities.
“The Chinese economy is slowing down, and the Chinese authorities are doing what they can to make the economy work,” said James Pindell, chief economist at BMO Capital Markets.
“They are trying not to put a lot pressure on the yuan and they are trying hard to hold down the price for the yuan.”
This could lead to a tipping point in the commodity markets and the commodities markets could go into a tailspin.
“A fall in Chinese mining output and a drop in exports have also contributed to the drop in global commodities prices, which are still higher than they were a year ago.
Last week, the US dollar index fell by nearly 0.3 per cent, while the benchmark Brent crude oil price fell by 1.2 per cent.
China’s benchmark Shanghai Composite index fell 1.7 per cent while the Hong Kong composite index dropped 3.3% on Tuesday.
Analysts have warned that if the commodities prices continue to decline in the coming months, it could have a negative impact on the global economy.”
The commodity market is like a rollercoaster in the last 10 years, it’s very volatile and if we see that the price goes down and commodity prices go up, that could lead us into a deflationary spiral.”