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Debt-ridden Russian steel and coal company Mechel saw its shares drop more than 40% on November 13, accelerating a fall that began the previous week. The plummet appears to have been driven by worries that the company cannot sustain its $9bn debt load in a slumping market for its product.

By the end of trade, Mechel stock closed down 41% at RUB57. That came on the back of the latest bout of weakness for the stock, which began on November 8 when the company released a third-quarter trading statement showing weak operational data in terms of both the coal and steel businesses. Mechel's shares have now lost almost 75% since the start of the year.

As the spiral developed on November 13, the company rushed out a statement claiming that the fall was being driven purely by speculation. "Discussions with banks over covenant holidays and debt restructuring are going well, we expect them to be concluded by the end of November," Mechel said in an emailed statement. "There are no negative events at the company. The fall in Mechel's share price ... is purely speculative."

Mechel began the day falling in tandem with other Russian coal miners and steel makers, which are suffering on concern that exports to China could suffer after its leaders failed to outline reform measures to reverse the economic slowdown there. On the Moscow Exchange, which was down 2.24%, the metals & mining sector lost 4.88%.

However, the next largest loser on the index was Raspadskaya at 8.82%, suggesting additional concern over Mechel, which may have then triggered automatic trades. Reuters quoted Alexei Bachurin, chief trader of cash equities at Renaissance Capital in Moscow, as saying that the fall had set off "lots of stop-loss orders".

VTB Capital noted on November 8 that the trading statement threw up significant worries over Mechel's ability to deal with its debt load. "The operational data, coupled with domestic and global coal price dynamics, points to Mechel breaching its 7.5x net debt/EBITDA covenant as of the end of both 1H13 and FY13 (the company has not yet reported its 1H13 results)," it wrote.

On top of that concern for ongoing results, the analysts noted that as "Mechel's divestment activity is not bringing much of a breakthrough in terms of deleveraging, the company is currently negotiating with creditors over covenants holidays. With no major turnaround in the deleveraging process, which remains in the spotlight, we are reiterating our cautious stance on the name."