ASX 200 resources giants lift despite plummeting iron ore price

Here’s what drove the iron ore price lower overnight.

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ASX 200 giants are holding ground on Thursday despite the falling iron ore price.

The price of iron ore has slipped to trade at US$124.16 per tonne today.

That represents a slump of more than 23% since this time last month. It also marks a significant decline from the 52-week high of US$233 per tonne, which it hit in May.

Interestingly, as the price of iron ore falls, the share prices of ASX 200 resources giants Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP) are in the green. Fortescue Metals Group Ltd (ASX: FMG) has slipped slightly in early afternoon trading.

Let’s take a look at what might be causing iron ore price to struggle.

Why is the iron ore price lower today?

The iron ore price struggled overnight as news from China seemingly dampened demand for the commodity.

According to Reuters, China released a report stating its steel output reached its lowest point since March 2020 last month.

China produced 83.24 million tonnes of steel in August, 4% less than it produced in July and 12% less than it did in the previous comparable period.

As China is the world’s largest steel producer, it imports a huge proportion of the globe’s iron ore.

In fact, according to the Minerals Council of Australia, around 80% of the iron ore exported from Australia goes to China.

China’s lower steel production will likely impact demand for iron ore and it has seemingly already debased confidence in the commodity.

However, China’s news hasn’t stifled the share prices of ASX 200 iron ore producers.

How are ASX 200 resource giants performing?

The BHP share price is tracking well today. The price of iron ore hasn’t notably affected its share price, which has gained 1.9% this morning. Investors can get their hands on a piece of BHP for $41.02.

The Rio Tinto share price has recovered from a poor start to this morning’s trade. Its currently 0.57% higher than its previous close, trading for $105.24.

After rebounding this morning, the Fortescue Metals share price has since slipped and is currently trading at $17.72, down 0.56%.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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