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Will Rio Tinto shares continue to stay down?

Shares of Rio Tinto, part of Australia’s big mining triumvirate, sustained their decline even after iron ore regained strength.

  • Rio Tinto (ASX: RIO) share price slides to A$95.42 per share on Tuesday
  • Iron ore prices bounced back on Monday, although caution lingered
  • Rio reported soft production numbers for its third quarter
  • Keen to take advantage of Rio Tinto's falling share price? Open an account with us to short the stock now.

Rio Tinto stock price analysis: What’s the latest?

At Monday’s close, Australian mining and energy stocks largely finished higher, supported by strong underlying commodity prices.

In particular, iron ore futures rebounded after their bruising losses last week, Reuters reported.

Shares of heavyweight miner Rio Tinto climbed about 1.8% to reach an intraday high of A$96.76 on Monday afternoon. The ASX-listed stock eased slightly to end the day at A$96.44, up 1.5% from Friday, clawing back some losses from last week’s sell-off.

On Tuesday, the RIO counter was trading 1.1% lower at A$95.42 as of 13:17 AEST in Sydney.

Out of 16 analysts, eight recommended ‘buy’, seven rated the stock ‘hold’, and one said to ‘sell’. Their average 12-month target price on shares of the world’s second-biggest metals and mining corporation stood at A$106.97, according to Bloomberg data.

Over the past week, bullish calls of ‘outperform’ or ‘buy’ came from Macquarie and Goldman Sachs, with target prices of A$133 and A$121 respectively. Bernstein recommended ‘market perform’ with an A$87 target, while Shaw and Partners said to ‘hold’ while eyeing A$100 per share.

Iron ore prices: What helped their recovery?

Benchmark iron ore prices sank to multi-week lows last week. On 21 October 2021, the most-traded January contract on China’s Dalian Commodity Exchange tumbled to a one-month low.

Dalian iron ore futures advanced this Monday, with the January contract ending day-time trading 1.7% higher, Reuters reported.

Sentiment over the steelmaking ingredient had improved after beleaguered Chinese property developer Evergrande appeared to have averted default. Analysts also pointed out that the latest set of weekly industry data indicated a fall in iron ore shipments from Australia and Brazil to China.

However, caution and concerns over declining demand for steel in China continued to keep overall enthusiasm in check, Reuters added.

Read more: Beginner's guide to day trading

Rio Tinto 3Q 2021 production dips

Earlier this month, Rio CEO Jakob Stausholm said the third quarter of 2021 ‘has been another difficult quarter operationally’, even though there was an improvement from the previous three months.

Production numbers for Pilbara iron ore, aluminium, mined copper and bauxite fell by 3-4% compared to 3Q 2020. Titanium dioxide slag saw a year-on-year decrease of 29%.

Rio also reduced its full-year guidance for Iron Ore Company of Canada pellets and concentrate to 9.5-10.5 million tonnes, from 10.5-12 million tonnes previously.

Guidance for refined copper was lowered to between 190,000 and 210,000 tonnes, due to an incident at a smelter in September.

On Monday, JPMorgan analysts retained their ‘overweight’ rating on the RIO stock while targeting A$113 per share, citing the soft third-quarter output as well as the reduced iron ore and copper guidance.

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