Fortescue (ASX:FMG) share price higher as China’s imports surge to record high in August

There is a long road ahead for Fortescue

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The Fortescue Metals Group Limited (ASX: FMG) share price is catching a bid on Wednesday, up 0.72% to $18.12.

Shares in the iron ore major tumbled 10.94% to $18.57 on Monday after going ex-dividend for a significant fully franked final dividend of $2.11 per share.

Iron ore rebounds following record Chinese trade figures

Iron ore prices rebounded on Tuesday after plunging to seven month lows on Monday.

According to Fastmarkets MB, benchmark iron ore prices increased US$5.59/t or 4.2% to US$137.97/t.

The uptick in prices comes after an unexpected jump in Chinese trade figures.

Bloomberg reported that the value of China’s iron ore imports hit new record highs in August despite policymakers recently implementing steel output controls to curb carbon emissions.

“China imported iron ore worth a record $20 billion in August, according to government data released Tuesday, as prices surged from a year earlier. Total volumes were 97.5 million tonnes”.

China’s overall trade performance in August defied expectations in light of the rapidly spreading Delta variant.

Prior to August’s trade figures, all signs pointed to a slowdown in the Chinese economy as supply-China constraints, higher raw material prices and extreme weather dragged on key areas of its economy.

Fortescue share price in the deep red

The Fortescue share price has plunged well into negative territory, down 27.1% year-to-date.

The retracement in iron ore prices from ~US$220/t in June to US$137.97/t has erased 12-months worth of hard earned gains.

Looking ahead, the Australian Financial Review (AFR) reported that the bounce in imports and demand for iron ore will prove to be short-lived.

“Analysts warned the combination of China’s carbon policies, a slowing property sector and Beijing’s desire to find alternative markets for iron ore point to a medium-term decline in demand for the commodity from Australia, although this could take time.”

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