Some of the ASX’s biggest mining shares are heading south following a trend reversal throughout the day.
The biggest company on the ASX by valuation, BHP Group Ltd (ASX: BHP), is currently down 0.43% to $47.46.
Ultimately, this has weighed on the S&P/ASX 200 Resources Index (ASX: XJR), which is falling 0.77% to 5,714.2 points.
What’s driving the ASX 200 mining shares lower?
There are a couple of reasons why the ASX 200 mining sector is trading in negative territory.
Firstly, the drop in iron ore prices over the past week is providing strong resistance to the resources industry.
Iron ore prices have sunk almost 5% since this time last Wednesday to trade at US$144.08 per tonne.
Furthermore, as COVID-19 continues to spread throughout China, there are fears that the government may enforce a wider lockdown.
It is expected that there will be a reduction in demand from Chinese steel mills in the next few months. This is because the construction sector has been heavily affected by the government’s strict zero-COVID policy.
The property and infrastructure industry comprises roughly 60% of China’s steel needs.
In addition to the ASX 200 mining sector weakness, the well-known phrase “sell in May and go away” could be playing a hand.
Historically, investors tend to offload their shares before tax time, leading to a broad underperformance across the market. Conversely, there is typically a rally after the end of the financial year, with July usually a strong month.