The Fortescue Metals Group Limited (ASX: FMG) share price is now down from $8.85 this time last month to $6.92 this afternoon, as iron ore prices continue to tumble from multi-year highs.
According to data provider Market Index iron ore has fallen from US$113 a tonne on July 13 2019 to US$93.60 a tonne today as investors fear China’s economy may slow on the back of a ballooning trade war with its main export market the US.
Iron ore is a key steel-making ingredient and China’s demand for it has been off the charts for over a decade thanks to its urban and infrastructure construction super cycle.
Another short-term factor supporting iron ore prices over the first half of 2019 was a pullback in supply out of Brazil after the Brumadinho mining disaster there in January 2019 saw almost 300 killed.
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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.