FMG, Rio Tinto and BHP share prices volatile as iron ore tumbles

We examine the current state of the iron ore market, as well as the impact falling iron ore prices have had on Australia's big three iron ore miners.

FMG, BHP and Rio Tinto share prices prove volatile

The iron ore market continues to exhibit volatility, with Australia’s mainstay iron ore miners – BHP and Fortescue Metals Group – both falling today.

The likely catalyst: broad weakness in the iron ore price over the last two days. Looking at today’s price action, the benchmark spot price for the 62% iron ore Fe Fines was down 2.18% – to US$92.59 per tonne – as of 14:05 AEDT.

In step with that, the materials sector witnessed broad declines: BHP Group (ASX: BHP) saw its share price fall 0.425%, Fortescue Metals Group’s (ASX: FMG) stock dropped 1.109%, and though Rio Tinto’s (ASX: RIO) shares declined at the open, they have since rebounded, trading up 0.44% – by the afternoon session.

By comparison, the broader market rose today, with the ASX 200 benchmark moving past the 6,900 point mark, up 47 points by the afternoon. Healthcare, consumer staples and communication services were the best performing sectors on Friday.

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Iron ore prices: the days that were

Though covering the price movements of yesterday’s iron ore market – January 9 – the following Market Commentary from the MMi Daily Iron Ore Index Report should give traders, investors and speculators a good idea of what caused today’s decline – as well as provide potential insight into next week’s market action.

MMi yesterday wrote that:

‘Mill demand plummeted as the DCE iron ore futures market dove during the morning session. Some traders indicated they were more willing to negotiate, but concluded deals were relatively few.’

The iron ore 62% Fe Fines was finished yesterday at US$94.40 per tonne – down 0.6%.

Looking towards next week, it was also pointed out that:

‘Although demand fell sharply, some traders were relatively firm on their quotes for medium grade products given the expected supply tightness and some unfinished restocking expected next week.’

Examining at other interesting statistics – and covering the week ending Jan 3, 2020; MMi yesterday reported that iron ore inventories at Chinese ports had fallen 1.39% – to 115.41 million tonnes.

Ultimately, total iron ore inventories have steadily risen over the last five months, building up from their July-August lows (coinciding with the bottoming of iron ore prices around the US$75.08 per tonne mark).

Mind you, Chinese port inventory levels remain well off the highs they achieved in early CY19.

Watch this space.

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