Why are ASX 200 iron ore shares getting hammered on Monday?

China imports some one billion tonnes of iron ore each year, but it’s economy looks to be slowing.

| More on:
a man wearing a hard hat stands in front of heavy mining machinery with a serious look on his face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

S&P/ASX 200 Index (ASX: XJO) iron ore shares are taking a beating today.

The benchmark index is back in the red today, down 0.7% in lunchtime trading. But the ASX 200 iron ore shares are doing it much tougher.

At the time of writing, the BHP Group Ltd (ASX: BHP) share price is down 4.66%; the Rio Tinto Ltd (ASX: RIO) share price is down 4.82%; and shares in Fortescue Metals Group Ltd (ASX: FMG) have tumbled 7%.

So, what’s going on?

China’s economy could be slowing

China, as you likely know, is the world’s biggest importer of iron ore which is used in its massive steel industry. The Middle Kingdom imports some one billion tonnes of the commodity each year. That represents approximately 70% of the total global annual purchased iron ore production.

Of course, if the pace of China’s economic growth slows, its demand for steel to construct new buildings and infrastructure will fall. And along with that, its demand for iron ore.

As analysts become increasingly bearish on the outlook for Chinese GDP growth, iron ore futures have nosedived, falling 9.1%.

And that decline is throwing up some strong headwinds for ASX 200 iron ore shares today.

How have these ASX 200 iron ore shares performed in 2022?

Although one of the three ASX 200 iron ore miners is in the red for the 2022 calendar year, all of them still beat the benchmark returns. And that’s without including their lucrative dividends.

Year-to-date, the ASX 200 is down 15.6%.

Over that same period, Fortescue shares are down 10%; the Rio Tinto share price is 1.5% higher; while BHP shares are up a healthy 9.4% so far in 2022.

Motley Fool contributor Bernd Struben 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 Scott Phillips.

More on Resources Shares

Young woman using computer laptop with hand on chin thinking about question, pensive expression.
Resources Shares

Down 20% in 6 months, what’s next for the BHP share price?

It’s been tricky for BHP shareholders recently. Can things turnaround?

Read more »

Two excited mining workers in yellow high vis vests and hardhats shake hands to congratulate each other on a mineral discovery
Share Gainers

Here are 2 ASX lithium shares surging on new discoveries

Demand for lithium continues to see high realised spot prices, with a positive flow-on effect to ASX lithium stocks.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Resources Shares

Up 80% in a month, why is the Province Resources share price on ice today?

What's going on with the minerals producer’s stock? We take a closer look.

Read more »

A miner reacts to a positive company report mobile phone representing rising iron ore price
Resources Shares

Guess which ASX mining share is rocketing 55% on a new lithium find

Ragusa Minerals is getting ready for its maiden drilling program at its NT Lithium Project.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Still down in 2022, is the Fortescue share price now on the road to recovery?

Let's see what the consensus amongst analyst is.

Read more »

A businessman in a suit wears a medal around his neck and raises a fist in victory surrounded by two other businessmen in suits facing the other direction to him.
Resources Shares

Why is the Lake Resources share price up so much more than other ASX lithium shares today?

ASX lithium shares are charging higher again today.

Read more »

happy mining worker fortescue share price
Resources Shares

Why has the Sayona Mining share price rocketed almost 100% in a month?

The lithium miner has been riding high recently. Here's why.

Read more »

A smiling woman holds an arm in the air in triumph while also holding a graphic of a fully-charged battery in her other hand representing the Pilbara Minerals share price
Resources Shares

What is graphene and could it threaten the future of ASX lithium shares?

Let's analyse.

Read more »