The Rio Tinto Ltd (ASX: RIO) share price is tumbling today.
Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner closed yesterday trading for $108.12. In morning trade on Wednesday, shares are changing hands for $105.85 apiece, down 2.1%.
For some context, the ASX 200 is down 1.7% at this same time.
As for Rio Tinto's chief rivals, BHP Group Ltd (ASX: BHP) shares are down 1.6%. And Fortescue Ltd (ASX: FMG) shares are down a precipitous 8.1%, with the stock under additional pressure as Fortescue shares trade ex-dividend today.
Here's what's going on.
What's pressuring the Rio Tinto share price?
The Rio Tinto share price, along with Fortescue and BHP shares, is feeling the heat from another sizeable fall in the iron ore price.
Investors hoping that the critical steel-making metal had reached a bottom and might retake US$100 per tonne this week have been left wanting. Overnight, the iron ore price fell 3.5% to US$93.45 per tonne.
Iron ore is Rio Tinto's top revenue earner, and any retrace tends to impact its share price.
The industrial metal has been under pressure amid ongoing weakness in China's economy, despite some modest stimulatory efforts rolled out by the Chinese government to date.
China counts as the top export destination for Aussie iron ore. But growth in the nation's steel-hungry residential markets and its factory output have remained subdued. And Chinese steel inventories have been ramping up, reducing the near-term outlook for iron ore demand.
What are the experts saying?
Commenting on the falling iron ore price that's pressuring the Rio Tinto share price, Robert Rennie, head of commodity and carbon strategy at Westpac Banking Corp (ASX: WBC) said (quoted by The Australian Financial Review):
We have been arguing for the last week or so that the recent bounce into the early US$100s in iron ore was a sell opportunity, so we are not at all surprised to see yesterday's crunch lower.
Early data for August [Chinese] property activity suggests that wave after wave of policy has failed to drive any signs of stability in home sales…
That data should be enough to hold [iron ore prices] below US$100 and set up for a test of US$90.
Daniel Hynes, senior commodity strategist at ANZ Group Holdings Ltd (ASX: ANZ), added, "China has shown little inclination to further stimulate the property sector. Measures to date have had little impact on improving confidence in the property market."
ANZ is forecasting an iron ore price in the range of US$90 to US$100 per tonne through the end of 2024.
But investors in the ASX 200 mining giants may get a reprieve later in the fourth quarter. That's when Lu Ting, an economist at Nomura Holdings, expects China's government to up its stimulus measures.
"For bolder stimulus measures, we think this is more likely to happen in the fourth quarter, when Beijing's concerns over growth become more elevated," Ting said.
With today's intraday losses factored in, the Rio Tinto share price is down 22% year to date, with the iron ore price down 35% from US$144 per tonne on 2 January.
