The Fortescue Metals Group Limited (ASX: FMG) share price is wobbling today. Earlier today it climbed as high as $15.17 but is currently trading at $14.68, a fall of 0.14% on the previous close.
The fall into the red continues a difficult month for Fortescue shares. They are down 28% over the past month, well behind the major benchmark indices.
Let's take a closer look at what's up with the Fortescue share price, and what brokers are saying in their analysis.
What's up with Fortescue lately?
The rapid decline in the price of iron ore is one major factor weighing down Fortescue shares lately. Iron ore has plummeted from previous highs of US$222 per tonne in July and now trades at US$104.50 per tonne.
Fortescue is an ASX resource share that produces commodities. In fact, it is the world's largest producer of iron ore. Because of this, it is considered a price taker.
As such, its share price is heavily tied to fluctuations and volatility within the broader commodity markets.
Given this relationship, it makes sense why Fortescue's share price has decreased by 43% since July 30, shortly after iron ore made its move south.
What are analysts saying about Fortescue?
One leading broker believes Fortescue is more sensitive to these deteriorating iron ore prices than the other large ASX-listed mining companies.
Analysts at investment bank Credit Suisse feel investors have concerns over the mining giant's cost inflation pressures.
In addition, the broker feels Fortescue's pivot into renewables-led technology is likely to be a pull on its share price valuation.
Speaking on its reasoning, the broker said there "may be little to like" on Fortescue shares until the "iron ore macro momentum recovers". It also said these headwinds will remain "until FFI successfully delivers value" – likely a few years away "even if successful in (its) view".
Fortescue continues to allocate 10% of net profit to Fortescue Future Industries (FFI), the company's push into renewable energy products.
Investors appear to agree with the broker's assessment, given the performance of Fortescue's share price over this year to date.
Fortescue share price snapshot
The Fortescue share price has had a tough year to date, and is swimming in a sea of red. It has posted a loss of 37% since January 1, and 9% over the past 12 months.
These results have lagged the S&P/ASX 200 index (ASX: XJO)'s return of around 25% over the past year.
