The Fortescue Metals Group Ltd (ASX: FMG) share price continues to crater amid weaker iron ore prices and broad-based selling taking place across the S&P/ASX 200 Index (ASX: XJO) on Wednesday.
At the time of writing, Fortescue shares are down 1.11% to $14.705, heading towards their recent 14-month low of $14.15.
Image source: Getty Images
Iron ore spot prices falls, futures hold steady
Iron ore prices weakened on Tuesday, sliding US$7.25 a tonne or 6.07% to US$112.06 a tonne.
According to Fastmarkets, market participants have "almost finished pre-holiday restocking and more provinces in China have placed further limits on electricity consumption and steelmaking production".
The National Day of the People's Republic of China is a public holiday that runs between 1 to 7 October.
There might be a slither of good news for the Fortescue share price on Wednesday, with Chinese iron ore futures sitting in positive territory.
Benchmark iron ore futures on China's Dalian Commodity Exchange, for January delivery, is currently trading 1.1% higher to around 685.5 yuan (US$105.98) a tonne.
China's energy crisis a win for the Fortescue share price
China is currently facing a major power supply crisis with more than half the country enduring power outages and electricity rationing.
This has, in part, been driven by the government's tough stance on energy consumption and emissions targets.
Domestic and international coal markets are also to blame with prices surging to all-time highs in addition to disruptions in shipping due to COVID-19 and weather conditions.
Analysts at Macquarie Group Ltd (ASX: MQG) have taken a positive spin on China's power crisis.
As covered by the Motley Fool this morning, Macquarie said:
As current production curtailment has shifted from emission reduction driven to power supply shortage driven, electric arc furnace (EAF) mills have seen a clear drop in their operating rate over past two weeks, helping demand for integrated mills that use iron ore.
Fortescue share price snapshot
The Fortescue share price is down 41% year-to-date, broadly in line with the halving of iron ore prices.
