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THE world’s two largest mining companies took a hammering on the Australian Stock Exchange today, with both shedding just under 4% in the wake of base metals prices plummeting in London on Friday.

Whilst market barometers BHP Billiton and Rio Tinto posted losses – BHPB fell $1.09 (3.9%) to $26.95 and Rio dropped $2.94 (3.7%) to $77.52 – it was those companies who had been riding the wave of record zinc and nickel prices over the past few weeks that suffered the most.

Analysts from Macquarie Research released a report today in which it flagged a market rebalance for the base metals sector in the short term on the back of slowing demand growth.

"While we retain an overall bullish stance toward the base metals sector and see the potential for a sustained period of high prices over the next three years, the risks of significant short-term price correction are growing," Macquarie said.

"The reason for this is the accumulating evidence that demand growth is decelerating in all the major markets and that supply is actually catching up with demand."

Major zinc players such as Zinifex, off $1.38 (8.1%) to $15.59, Kagara, down 44c (5.7%) at $7.28, and Perilya, 42c (8.5%) lower at $4.50, posted major losses after the three-month zinc price on the London Metal Exchange dropped 4.8% to $US4300 per tonne on Friday although stocks of the metal continued to fall.

Nickel players were not exempt from the selldown, with Jubilee shedding 98c (7.2%) to $12.70, Minara Resources falling 40c (6.8%) to $5.50, Independence Group dropping 25c (5.1%) to $4.64, and Sally Malay down 12c (6.2%) at $1.805. The stocks were savaged after the nickel price fell below $US30,000.

The news will not get any better for nickel players, according to analysts from UBS, who have tipped a 20% fall in the nickel price over the next three months to $25,000-26,000. UBS cited softer demand, increased substitution due to higher prices and India producing more stainless steel-types with low nickel content.

Three-month copper fell to four-month lows on the LME on Friday, dropping 5.5% to $6920/t or $3.13 per pound. ASX-listed copper miner Oxiana Resources dropped 23c (6.8%) to $3.14, while Aditya Birla fell 18c (7.5%) to $2.23 and Anvil Mining closed down 16c (10.8%) to $1.32.