BHP Billiton spin-off South32, which launched on the sharemarket with high hopes in May, tumbled to a new low on the ASX today amid a global commodity crunch, with shares down more than 30 per cent from their high point shortly after listing.

The diversified miner, which holds BHP's former non-core coal and base metal assets, has been hit by weak commodity prices and soft global demand amid a rising US dollar.

The shares, which hit a peak of $2.37 after listing, fell as much as 3.4 per cent to $1.56 in today's trade, taking the total decline from the posting-listing high to 34 per cent. The stock closed at $1.585.

South32, a miner of metals such as nickel, coal, silver, aluminium and zinc, has seen commodity prices crash during its short life. Bloomberg's commodities index slumped to its lowest point in 13 years recently.

The prices of nickel, copper and zinc are all hitting their lowest points since 2009, as concerns about slowing economic growth in China are pushing industrial metals down.

IG market strategist Evan Lucas today said the 2009 slump in prices was based on the fear that there would be a collapse in global liquidity,which would lead to a grinding halt in demand for industrial metals.

"Now however, with the sustained ramp up in supply coupled with sluggish demand from the world’s second largest economy, a price collapse is imminent," Mr Lucas said.

South32 was "the stock to watch" in response to the collapse in nickel, he said recently.

Macquarie Wealth Management wrote in a note, distributed to clients on Monday, that 50 per cent of the global nickel industry is currently loss-making on a cash basis. 

It was the first time Macquarie had written about nickel since June, when it produced a note titled "Nickel: darkest before the dawn". "Since then prices have fallen," Macquarie said.

The main end-use market for nickel is in stainless steel production.

Goldman Sachs analyst Craig Sainsbury says the miner's upcoming results will be a chance for South32's management to address some "uncertainties" and variances in the market's expectations.

Mr Sainsbury said, in a note distributed to clients yesterday, that a stock buyback may be in order, estimating that the firm could buy back around $1 billion of stock, assuming spot commodity prices hold and if the company can maintain its investment grade credit rating.

Assuming South32 addresses the issues of capital expenditure, power contracts in South Africa and Brazil, and cost savings targets, Goldman Sachs said the firm could see a better trading period post-results. 

But among the key risks out of the control of South32 that Goldman lists are lower commodity prices and a stronger US dollar. 

South32’s stock has become so discounted that it recently hired defence advisers Macquarie Capital and Morgan Stanley amid heightened speculation the company was firming as a takeover target.

The miner, due to report its financial accounts on August 27, has flagged a $US1.9 billion writedown on manganese and coal assets, and said curtailing production of manganese and aluminium was designed to maximise shareholder value, rather than volume.

• [Editor:Juan]