Why did the Mineral Resources share price tumble on Thursday?

This mining share has taken a hit on Thursday…

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A young woman wearing a blue and white striped t-shirt blows air from her cheeks and looks up and to the side in a sign of disappointment after the ASX shares she owns went down today

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Key points

  • Mineral Resources shares tumbled on Thursday
  • A pullback in iron ore prices weighed on sentiment
  • As did concerns about future lithium prices

The Mineral Resources Limited (ASX: MIN) share price was out of form on Thursday.

The mining and mining services company’s shares dropped 3% to $47.22.

Why did the Mineral Resources share price drop?

Investors were selling down the Mineral Resources share price today amid concerns over the price of its two key commodities – iron ore and lithium.

In respect to the former, according to Metal Bulletin, the benchmark iron ore price continued its decline and fell a further 5.5% to US$109.40 a tonne during overnight trade.

This was driven by weakness in downstream demand in China despite the announcement of accelerated fiscal expenditure.

In addition, concerns that there could be a global recession have been weighing on base metal prices. This has led to fellow miners BHP Group Ltd (ASX: BHP) and Fortescue Metals Group Limited (ASX: FMG) dropping today.

As for the latter, lithium shares were sold off again on Thursday amid concerns over future prices of the battery making ingredient. This follows news out of Germany this week that it plans to scrap its ban on petrol and diesel car in 2035 in order to support its auto manufacturing sector.

If the rest of Europe follows suit, there could be fewer electric cars on the roads in 10 years than current forecasts. This would have obvious consequences for lithium demand.

So, with some analysts predicting that there will already be an oversupply of the white metal in the coming years, prices could go even lower than some fear.

Though, it is worth remembering that a lot can change between now and then.

Motley Fool contributor James Mickleboro 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.

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