How leading ASX-listed iron ore miners are performing amid falling iron ore prices

Highlights

  • Iron ore prices dropped significantly as a result of China’s initiative to limit steel production.
  • The country has produced 83.24Mt of crude steel in August, registering a drop of 13.2%.
  • Yunnan province of China has recently introduced fresh production curbs and asked local manufacturers to reduce the production.

Prices of 62% Fe fines imported into Northern China tumbled around 7.7% on Thursday to trade at around US$107.21 per tonne. The significant drop in the prices of iron ore is witnessed as a result of China’s initiative to limit steel production with an aim to reduce its carbon footprints.

The country produced 83.24Mt of crude steel in August, registering a drop of 13.2% relative to the previous corresponding year, as per the data released by China’s National Bureau of Statistics.

Related Article: Iron ore tumbles on expectations of steel production curbs in China

China’s Yunnan province has recently introduced fresh production curbs and asked local manufacturers to reduce the production of aluminium, steel, and other materials. The province contributes nearly 2.3% of the total crude steel production of the country and is lately targeted due to the nation’s blue skies campaign aimed at reducing air pollution.

Given this backdrop, let’s look at three leading ASX-listed iron ore players and their performance amid tumbling prices of the base metal.

ASX Iron Ore Stocks

Rio Tinto Limited (ASX:RIO)

Based in Melbourne, Australia, Rio Tinto Limited (ASX:RIO) is one of the leading iron ore producers in the country. The company is engaged in the production of multiple commodities and holds operations globally.

Iron ore is the primary business of the company and its main revenue driver. However, a record dip in the global prices of iron ore has weighted the share price of RIO significantly by ~12% on a YTD basis. The shares tumbled around 13.02% in the last month due to subdued demand for iron ore in China.

Must Watch: ASX nosedives 1%; BHP, Rio, Afterpay, Omni Bridgeway fall

RIO has recently commenced the process of resuming operations at South Africa's Richards Bay Minerals.

BHP Group (ASX:BHP)

Headquartered in Melbourne, BHP Group (ASX:BHP) is the world's leading resource player. The company is engaged in the exploration, production, and marketing of various minerals and oil and gas operations.

Falling iron ore prices

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The group has produced 254Mt iron ore during FY21, nearly 2% up from previous year’s production. BHP has set a guidance range of 249-259Mt for iron ore production for FY22. Shares of BHP tumbled around 9% in 2021, with ~14.17% losses coming in the last three months alone.

The management of the company has declared a final dividend of US$2.0 per share, with a payout ratio of 92%.

FMG Group (ASX:FMG)

FMG Group (ASX:FMG) is one of the biggest iron ore companies in Australia. FMG has its headquarters in Perth, Australia. The group serves the entire value chain of the iron ore industry, ranging from exploration to the marketing of the product.

In FY21, the group shipped 182.2Mt iron ore, up 2% relative to the annual shipments of FY20. The average revenue per dry metric tonne increased by 72% relative to previous financial year.

Also Read: ASX 200 opens flat ahead of RBA meet; FMG, Rio Tinto down

Shares of FMG tumbled the most among the three iron ore players. Fortescue Metals has recorded a YTD decline of ~38.69%, while the shares slumped as much as ~28.67% in the last month alone.

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