The Fortescue Metals Group Limited (ASX: FMG) share price has been amongst the worst performers on the market today, falling 4% to $4.91.
Today's decline means its shares have now lost almost 25% of their value in the last three months.
What happened?
Unsurprisingly, today's drop is related to a sharp decline in iron ore prices. According to Reuters, iron ore futures in China have fallen over 5% to a four-month low today.
Prices have come under pressure over concerns that Chinese officials could be about to limit the output of steel producers amid a crackdown against polluting industries.
This week the city of Tangshan in the leading steel-producing province of Hebei launched a campaign to improve its air quality. Officials stated that steel mills would be suspended and face heavy fines if they failed to meet emission standards.
Fellow iron ore producers Atlas Iron Limited (ASX: AGO), Grange Resources Limited (ASX: GRR), and Mount Gibson Iron Limited (ASX: MGX) have also fallen on the news.
Should you buy the dip?
Even with iron ore prices at four-month lows, Fortescue remains highly profitable. However, until the iron ore price finds its bottom I would stay clear of the miner.
I believe that reduced demand and increased supply will result in further pressure on prices over the next few months. My concern is that this could also drag Fortescue's share price along with it.
So for now I would suggest investors focus elsewhere in the market such as the information technology and healthcare sectors.
At present I feel both sectors are home to a number of quality shares trading at great prices.
