ASX mining companies look set to open the week lower on news that the Chinese government is preparing to crack down on record iron ore prices. According to the AFR, the "relevant department in the Chinese government was investigating the price hikes in the first six months of the current year." Beijing is looking into 'irregularities' in the sharp price rises that iron ore has experienced over 2019 so far.
How did China's announcement impact the Aussie miners?
Although the ASX had closed for the week when the announcement was made, shares of the UK-traded ASX mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) fell 2.8% and 3,8% respectively, on the London exchange on Friday.
Further to this, there are now expectations that China's previously insatiable appetite for iron ore may be reaching a peak as a slowdown in GDP growth as well as the ongoing US–China trade war continues to bite, sapping consumer and business confidence in the world's second largest economy.
Falling iron ore exports
Last week, a Department of Industry, Innovation and Science report stated that the government was cutting its 2019 forecast for iron ore exports to 814 million tonnes from its March forecast of 867 million tonnes. This would be the first time since 2001 that iron ore export volumes have fallen, although current prices are likely to still leave the mining companies with record profits for the year.
The share prices of BHP, Rio and Fortescue Metals Group Ltd (ASX: FMG) are likely to be very sensitive to any negative news as all companies have just come off new 52-week highs on the back of the galloping iron ore prices that 2019 has seen so far, and are all at or above 5-year highs. There may be significant profit-taking at this news and shares are likely to trade lower at this morning's market open.
