Because BHP, Fortescue and Rio Tinto shares have deteriorated today


It was a disappointing start to the week for three of Australia's largest mining companies.

In the afternoon, trade BHP Group Ltd (ASX: BHP) share price fell 2.5%, the Fortescue metals Limited group (ASX: FMG) share price is down 4.5%, and the Rio Tinto Limited (ASX: RIO) The share price has decreased by 3.5%.

Why are BHP, Fortescue and Rio Tinto falling on Monday?

Investors headed to exits on Monday after iron ore prices fell sharply for the second consecutive day on Friday.

According to the Metal Bulletin, the price of iron ore fines of 62% of reference fell by 2.2% to $ 101.60 dollars per ton. This last decline means that it has fallen just below 6.5% since it reached its five-year high at the beginning of last week.

It was not only the fines of reference that were put under pressure. Also on Friday, the price of both lower quality and high quality mineral prices fell. 58% of the low quality fines fell by 2% to USD 88.55 per ton and the fines of 65% fell to 1.1% to USD 117.70 per ton.

Unfortunately for iron ore producers, Chinese futures point to further declines on Monday as the market reopens.

Why is iron ore under pressure?

According to Reuters, iron ore and other raw materials for steel have collapsed due to lower demand for steel. This follows the release of economic data that revealed that China's productive activity declined more than expected last month.

Helen Lau, mining and metallurgical analyst at Hong Kong's Argonaut Securities, told Reuters: "China's steel PMI slipped into the contraction zone along with the official Chinese manufacturing PMI. We expect the profitability of steel companies to fall will deteriorate rapidly in the future ".

If the slowdown in steel rates persists, it is likely that it will drag iron ore demand and put pressure on prices and ultimately the shares of BHP, Fortescue and Rio Tinto that have soared thanks to the incredible iron of 2019.

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Motley Fool's collaborator James Mickleboro has no position in any of the stocks mentioned. Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all have the same opinions, but we are all convinced that, considering a wide range of insights, we have become better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (with AFSL 400691). Authorized by Scott Phillips.

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