2024 has been a rough year for most S&P/ASX 200 Index (ASX: XJO) mining stocks.
Drilling down to the big three iron ore miners, here's how they've performed year to date (not including their dividend payments):
- Fortescue Ltd (ASX: FMG) shares have fallen 32.08%
- BHP Group Ltd (ASX: BHP) shares are down 19.48%
- Rio Tinto Ltd (ASX: RIO) shares have dropped 10.97%
For some context, the ASX 200 has gained 11.65% so far in 2024.
Now, iron ore counts as the biggest revenue earner for all three of these ASX 200 mining stocks.
And a look at the iron ore price offers a good explanation for the headwinds they've been facing.
In early January, the steel-making metal was trading for US$142 per tonne.
After slipping into the low US$90 per tonne range in September, the iron ore price has since recovered to trade at US$105 per tonne on Thursday.
Copper is also a growing revenue earner for the big Aussie miners, and the red metal is expected to remain in strong demand amid the global push towards electrification.
Copper prices have held up better than iron ore, kicking off 2024 at US$8,545 per tonne and trading on Thursday for US$9,083 per tonne. Though copper prices have also come off the boil, down more than 16% since fetching US$10,889 in late May.
With this picture in mind, what can investors expect from ASX 200 mining stocks in 2025?
What's ahead for ASX 200 mining stocks?
While BHP, Rio Tinto and Fortescue shares will each face their own company-specific issues in 2025, the price they receive for their iron ore will be a key factor in how the ASX 200 mining stocks perform for shareholders.
On that front, most analysts (including those from BMI and Goldman Sachs), expect the industrial metal will trade at an average 2025 price at or below US$100 per tonne.
"We expect iron ore prices to continue to be hit by a weak demand outlook, barring additional support measures from mainland China in the coming months," BMI's analysts said (quoted by The Australian Financial Review).
Now, here's a little insider secret you may want to keep in mind when positioning your portfolio for the year ahead.
When it comes to gauging the trajectory of commodity prices like iron ore, even the best analysts with access to the best data can really only offer their best guess.
And a major qualifier in BMI's forecast is "barring additional support measures from mainland China".
While my crystal ball is no clearer than anyone else's, I expect to see significant new stimulus measures from the Chinese government in 2025. With Donald Trump moving back into the White House, I don't believe Chinese President Xi Jinping's government can afford another year of low economic growth.
With that mind, I expect that iron ore prices will likely trade above the levels that markets are currently pricing in.
And that should bode well for the performance of ASX 200 mining stocks in 2025 after the big slide they've suffered in 2024.
