Why did iron ore shares lag the ASX 200 on Monday?

Iron ore shares struggled against the ASX 200 on Monday. Could news out of China be one of the reasons why?

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Key points

  • Iron ore explorers lagged the ASX 200 Index today 
  • The ASX 200 finished 0.82% in the green 
  • Meanwhile, China is planning to closely monitor iron ore prices

Iron ore shares struggled against the ASX 200 on Monday.

Fortescue Metals Group Ltd (ASX: FMG), Rio Tinto Ltd (ASX: RIO) and BHP Group Ltd (ASX: BHP) trailed the benchmark index at market close.

Fortescue shares slid 2% today, while Rio Tinto shares slipped 0.1%. The BHP share price was up just 0.1% at the market close after hitting a milestone $50 per share high earlier today. The S&P/ASX 200 (ASX: XJO) jumped 0.82% to finish at 7,388.2 points at today's close.

Let's take a look at what may have weighed on iron ore shares on the ASX 200 today.

What happened?

News emerged yesterday that China's economic planning agency would seek to crack down on surging iron ore prices by heightening its supervision, according to Bloomberg.

All three iron ore-producing giants — Fortescue, Rio and BHP — are impacted by the iron ore price, which can weigh on potential earnings and, therefore, investor sentiment.

China's National Development and Reform Commission advised on Sunday it was interviewing companies relating to iron ore. In a statement (translated into English), the commission said:

The National Development and Reform Commission will continue to pay close attention to changes in the iron ore market and prices, and work with relevant departments to further study and take measures to severely crack down on illegal activities such as fabricating and disseminating information on price increases, hoarding, and price gouging, so as to effectively ensure the smooth operation of the iron ore market.

Iron ore futures on the Singapore Exchange have fallen 4.50% to US$119.85 at the time of writing.

The ASX 200 iron ore shares also produce other metals and minerals, including copper, nickel, zinc and aluminium. Aluminum is currently up 1.82%, while zinc is 2.74% higher, according to trading economics. Copper is down 1.16%, while nickel is sliding 0.85%.

Share price snapshot

The BHP share price has gained nearly 20% in the last 12 months.

Fortescue shares have climbed 4% in the past year.

The Rio Tinto share price has jumped 10% in the last 52 weeks.

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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