The ASX mining share sector, particularly ASX iron ore shares, have suffered some pain recently.
Since 6 September, the BHP Group Ltd (ASX: BHP) share price has fallen around 5%. From 5 September, the Rio Tinto Ltd (ASX: RIO) share price has dropped 3%. Since the end of August, the Fortescue Metals Group Ltd (ASX: FMG) share price has dropped by more than 7%.
It hasn't been the best period for the big iron ore miners, but one broker – Citi – thinks the worst may be over for the sector.
Clouds lifting for ASX mining shares?
According to reporting by The Australian, Citi said September is normally a seasonally weak month for the iron ore sector, while the three months to December usually demonstrate a stronger period.
Citi is basing that opinion on looking at 25 years of data which suggests the period from October to the end of the calendar year typically shows a rise in the iron ore price. Perhaps unsurprisingly, ASX mining shares usually perform well during this period too.
Citi wrote:
While the mining equities have corrected in the recent weeks, they have remained resilient relative to the prevailing bearish sentiment around macro backdrop relating to China.
Without ruling out incremental jitteriness, we think we are possibly around the end of this rough patch [where] favourable seasonality effect could alleviate some of the concerns.
We therefore believe that the ongoing jitteriness over China demand would likely present positioning opportunities to the investors into the year-end and full-year earnings in Feb-Mar 2024.
What next?
The quarter for the three months to 30 September 2023 will soon finish for the iron ore giants, and we'll probably hear about those operational results in just over a month.
While each business doesn't have much influence over what happens with the iron ore price, they are in control of how much iron they produce. If they deliver production numbers that beat the market's expectations then October could be a positive month, though it could be negative if there were production issues, or if the Chinese economy worsens.
ASX mining share snapshot
Since the start of 2023, the Fortescue share price has fallen 3.2%, the BHP share price has dropped 3.3%, and the Rio Tinto share price has declined 1.2%. This compares to a 3.3% rise for the S&P/ASX 200 Index (ASX: XJO).
