Rio Tinto (ASX:RIO) share price breaks below $100 for the first time since November 2020

Rio Tinto shares briefly traded at a double digit figure this morning…

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The Rio Tinto Limited (ASX: RIO) share price has gone from bad to ugly, hitting an intraday low of $99.02 on Friday.

At the time of writing, shares in the iron ore major are down 3.1% to $100.46.

Iron ore bulls might want to look away

Iron ore prices have been under immense downward pressure since late July after China announced its plans to cap the country's steel output to no more than 2020 figures.

The price of the black rock has since cratered from record highs of about US$230 per tonne in May to a 14-month low of US$107.2 per tonne on Thursday, according to Fastmarkets.

This move is broadly consistent with the Rio Tinto share price tumbling to 11-month lows on Friday.

According to Rio Tinto's half-year results, the company's average realised price for iron ore was US$168.4 per tonne.

With current spot prices well below what Rio Tinto was receiving, this could only mean bad news for its margins and near-term outlook.

Why did iron ore halve in less than 4 months?

A number of factors relating to China have chipped away at the value of iron ore.

More recently, S&P Global reported that China was "on track to reduce its 2021 crude steel output below the 2020 level for the first time since 2016".

According to the report, "China's August crude steel output dropped 13% on the year and fell 4.1% on the month, to 80.24 million mt, the lowest level seen since March 2020.".

The drivers behind the sudden slowdown in crude steel output include government mandates on production, energy consumption controls and weak demand from the property sector.

S&P Global warned that tightening credit and a slowdown in China's property sector could spark more weakness for near-term demand.

It said: " … Chinese property developer Evergrande Group on Sept. 14 flagged a possible default on loans due to a slowdown in property sales.

"The Shenzhen-based company has incurred liabilities of roughly $305 billion. A default on credit could likely spark a domino effect in China's property sector, and result in lower steel and raw materials prices in Q4," according to S&P Global Platts Analytics.

Rio Tinto share price falls on high volume

The Rio Tinto share price has managed to bounce off its intraday low of $99.02 today and is holding above $100 at the time of writing.

Approximately 2.96 million Rio Tinto shares have traded hands so far today, compared to its current 10-day average volume of 1.51 million shares.

Motley Fool contributor Kerry Sun 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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