Big Miners Grow Cautious (RIO, BHP, VALE, SCCO, FCX)

For several months now, the world’s largest mining firms have been re-affirming that their businesses are solid and that demand has remained solid. Now, though, the veneer may be cracking. Both Rio Tinto plc (NYSE: RIO) and BHP Billiton Ltd. (NYSE: BHP) are now warning that customers are becoming more wary as the global economy appears to stalling again.

As recently as late September, these miners, together with Brazil’s Vale SA (NYSE: VALE), Southern Copper Corp. (NYSE: SCCO), and Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) said that they had experienced no downturn in orders or expectations.

Iron ore prices have dropped more than -20% since September, so claims that the companies can sell all they produce are somewhat hollow, given the drag created by rising costs, falling prices, strong exchange rates in Australia and Canada, and softer demand.