Do you want the good news or the bad news on the iron ore price?

The news is mixed on the outlook for the steel-making ingredient.

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Key points

  • ASX iron ore shares were trading in the green today
  • Chinese inflation data was better than expected 
  • But investors are waiting for clarity on steel demand for the rest of this year

The iron ore price is lifting on Asian markets today following the latest inflation data from China.

Given that iron ore is used to make steel and China is the largest steel producer in the world, the state of China's economy is relevant to iron ore producers in Australia.

ASX 200 iron ore producers include BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO).

Let's take a look at what could be on the horizon for the iron ore price.

Chinese inflation still remains low

BHP shares were trading 2.01% higher at the market close today, while shares in Fortescue Metals were up 0.59% and Rio shares had lifted 0.85%.

Iron Ore Futures for a November 22 contract lifted 1.54% to US$93.40 on the Singapore Exchange this afternoon.

This follows news that Chinese inflation data leapt 2.8% year on year in the month of September. This was a better result than expected. Economists were predicting a 2.9% jump in inflation, Bloomberg reported.

However, it's not all good news. Trading economics data shows that prices for iron ore cargoes for delivery into Tianjin fell to the lowest point in nearly 11 months overnight.

Commenting on the iron ore outlook price in a research note this morning, ANZ senior rates strategist Jack Chambers said:

Investors are waiting for more clarity on steel demand for the rest of the months this year. Supply side is weakening as well with falling exports from Australia and Brazil.

An Industry Department Resources and Energy quarterly report released last week predicts iron ore export earnings will fall from $134 billion in the 2022 financial year to $119 billion in FY23 and $95 billion in FY24.

Share price snapshot

Shares in BHP and Fortescue Metals are up a respective 19% and almost 20% over the past 12 months, while Rio shares have fallen 4%.

In comparison, the ASX 200 has lost 7.5% in the last 12 months.

Motley Fool contributor Monica O'Shea 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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