The Fortescue Metals Group Ltd (ASX: FMG) share price is having a hard time digging itself out of its recent rut.
Fortescue shares managed to eke out some gains this morning, opening 0.32% higher to $15.80.
But by the time Chinese iron ore futures markets began trading around 11 am, Fortescue’s gains faded and snowballed to steep losses.
At the time of writing, the Fortescue share price is trading 5.21% lower at $14.93.
Iron ore spot prices rise but futures tumble
Benchmark iron ore prices rallied strongly on Monday, rising 6.2% to US$119.31 a tonne.
According to Fastmarkets, buying activity picked up due to pre-holiday restocking activities ahead of China’s National Day which runs between 1 to 7 October.
As such, the Fortescue share price rallied 2.67% on Monday to $15.75.
On the flip side, benchmark iron ore futures on China’s Dalian Commodity Exchange, for January delivery, plunged on open this morning, diving 4.3% to around 670 yuan a tonne (US$103.7).
Chinese power curbs intensify
China is in the midst of a power supply crisis where 16 of its 31 provincial-level jurisdictions are rationing electricity after failing to make progress earlier in the year, according to the South China Morning Post.
Meanwhile, its crisis has driven up the price of energy commodities such as coal, oil and LNG, some of which are surging to all-time highs.
However, the power cuts and China’s broader carbon goals have forced smelters to curb production, reducing their demand for iron ore.
Mining.com reported that capacity utilisation rates for 247 blast furnaces at steel plants continued to ease. Utilisation rates across China stood at 82.06% last week, down from 83.74% the week earlier.
Fortescue share price snapshot
Things were looking promising for Fortescue, rallying above $16 last Thursday.
Unfortunately, the mounting pressures across China’s energy crackdown, Evergrande crisis and growth outlook have kept comeback hopes at bay.
The Fortescue share price is down 39.8% year-to-date and down 5.8% in the last 12-months.