Investors nervous on iron ore price
Australia's major iron ore players are under pressure as the price of the steel-making ingredient continues to slide.
While investors expect strong first half earnings results from the likes of Rio Tinto, BHP Billiton and Fortescue Metals Group in February, they are eager to hear where prices could go in the second half.
Rio Tinto looks well placed to deliver a healthy full year profit next month after achieving record iron ore shipments in 2013, and BHP Billiton and Fortescue Metals Group are expected to follow suit.
But as the iron ore price sits around $US127 per tonne, after trading between $US130 and $US140 in recent months, analysts say recent falls could show up in the company's full year results later this year.
IG market analyst Evan Lucas says iron ore-focused miners are feeling the heat after the price of the commodity fell two per cent overnight, bringing it back to June 2013 levels.
It is now down 8.1 per cent, in Australian dollar terms, since the beginning of the year amid local currency weakness.
"All the major iron ore players are under a lot of pressure, particularly the pure plays, and that will probably last until people get their heads around where China is at in terms of their iron ore stockpiling," Mr Lucas said.
At 1410 AEDT shares in the major iron-ore stocks were significantly weaker, with pure play miner Fortescue Metals Group down 4.5 per cent to $5.41 and Atlas Iron shares 4.1 per cent lower at 94 cents.
Mining giant Rio Tinto, which makes about 90 per cent of its money from iron ore, was 0.75 per cent lower at $65.97 and diversified resources company BHP Billiton was 0.3 per cent lower at $37.88.
Mr Lucas added that recent price falls could also be related to seasonal factors such as the upcoming Chinese New Year holiday period.
Next month, investors will be looking to see whether full year predictions will be softer than expected as they try to gain an insight into how iron ore demand is tracking.
BHP Billiton releases its fourth quarter production report on Wednesday while Fortescue Metals Group and Atlas Iron will release their quarterly production reports next week.
