It's been another rough day for the S&P/ASX 200 Index (ASX: XJO) and many ASX 200 shares as we start the new trading week this Monday. At the time of writing, the ASX 200 has slipped by another 0.26%, putting the index back below 7,650 points. But let's talk about what's happening with the Fortescue Ltd (ASX: FMG) share price.
Fortescue shares are having an even worse day than the broader market. The ASX 200 iron ore mining giant had a horrid day on Friday, falling by 2.32% down to $23.96 a share. But today, investors have pushed Fortescue shares even lower, with the miner currently down another 177% to $23.54.
Not only is this new share price a fresh 2024 low for Fortescue, but it's also the lowest the company has traded at since early November. Investors have also endured a drop of more than 20% since Fortescue printed a new record high of $29.95 a share back in late January.
So what's going on today that is pushing Fortescue to these new 2024 lows?
Image source: Getty Images
Why are Fortescue shares getting crushed to new lows today?
Well, it's definitely not because of anything out of the company itself. Fortescue has released no official ASX news or announcements today, or indeed over the past week.
However, we can point to one rather negative development that might just be influencing investors with Fortescue shares this Monday.
Iron ore, the primary commodity Fortescue mines, has had a terrible month. According to Business Insider, the industrial metal was asking around US$128 per tonne a month ago.
But by last week, that same tonne was costing just US$115. Today, we've seen the metal fall steeply again, with iron ore futures now reportedly trading at under US$100 per tonne.
As reported by the ABC, CBA analyst Vivek Dhar blames this iron pricing collapse on China's struggling property sector:
With steel consumption in China's property sector slanted towards the early stages of construction, we have higher confidence that property related steel demand will continue to remain subdued given a meaningful turnaround in the financial health of China's property developers will be needed to boost new construction activity.
This explanation makes sense, as Fortescue is highly reliant on the iron ore price for its profitability, given iron ore sales typically account for over 95% of Fortescue's earnings.
We're also seeing falls in other ASX iron ore miners today, including BHP Group Ltd (ASX: BHP) and Champion Iron Ltd (ASX: CIA).
Fortescue shares are now down 19.9% year to date but remain up a far more pleasing 13.22% over the past 12 months.
