The iron ore price has been in a downtrend for most of the past year, settling at US$91.61 per tonne at the time of writing.
This is down from US$144 per tonne back in January.
Iron ore faces additional pressure as Chinese steel exports are set to hit a multi-year high, flooding the market with low-cost supply.
As a result, iron ore prices are tumbling, with iron ore majors Fortescue Ltd (ASX: FMG), Rio Tinto Ltd (ASX: RIO), and BHP Group Ltd (ASX: BHP) firmly in the spotlight.
Let's take a closer look.
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Why is the iron ore price falling?
Reports indicate that Chinese steel exports are set to nudge to an eight-year high in 2024.
According to the Financial Times, estimates suggest that 100 million tonnes of steel could leave China's shores for various export markets this year.
If this is the case, it would be the highest export level since 2016.
One reason is that domestic demand in China for steel has slowed, pushing producers toward the export market instead. This has led to oversupply and falling prices.
Analysts also point to weak economic data from China, rising inventories, and softening global demand as other factors driving iron ore prices lower.
Ian Roper of Astris Advisory Japan told the media outlet, "China has been flooding the world with steel and pushing prices down".
Another major driver of this export trend is likely the projected steel imports from European companies.
According to Daniel Hynes of ANZ Research, high energy costs are partly to blame for the trend (per the Financial Times):
Particularly at the moment when we're seeing producers in some of those regions, like Europe, for example, suffering from higher energy costs . . . that's opened the door for Chinese steel producers…
This could impact the iron ore price moving forward.
What's the outlook for iron ore?
Fortescue, Rio Tinto, and BHP are all feeling the pinch from the sliding iron ore price. Fortescue shares are down 44% year to date.
Meanwhile, Rio Tinto is down 22%, and BHP shares have dipped 23% in the red this year.
Looking ahead, some analysts remain cautious about the recovery of iron ore prices. Goldman Sachs, for instance, retains a bearish stance on Fortescue, citing valuation concerns and ongoing risks with its Iron Bridge project.
The broker has a price target of $15.40 for the share, highlighting potential downside. Fortescue currently trades at $16.15 apiece.
Meanwhile, Bell Potter analyst Giuliano Sala Tenna said Fortescue "should be able to make money through this cycle".
On the flip side, Goldman Sachs rates Rio Tinto a buy with a $136 price target, whereas Morgans has a buy rating on BHP. This is despite the current iron ore price.
Foolish takeaway
The tumbling iron ore price is creating headwinds for Australia's major miners. While Fortescue, Rio Tinto, and BHP remain resilient businesses, the falling commodity price has brokers mixed on their outlooks.
All three stocks are in the red looking back over the past 12 months.
