Sumary of The Fortescue (ASX:FMG) share price is down 31% in 7 weeks. What’s next?:
- Unfortunately for shareholders, more steel production curbs are being imposed in China.
- This continues to weigh on the weakening price per tonne of iron ore.
- Policies stronger than steel What was once booming is now bending back down at the peril of China’s production curbs.
- Iron ore prices fell another 4.5% yesterday to a 10 month low of US$123.84 a tonne.
- According to reports, China’s steel-producing province Yunnan has instructed steel mills to ensure crude steel output decreases in 2021. Meanwhile, government documentation noted that part of September’s planned production would be delayed to November and December.
- The steel mills of Yunnan province are responsible for approximately 2.3% of China’s total crude steel production.
- If supply was to increase out of pace with demand, this could potentially weaken iron ore prices further, likely dampening the Fortescue Metals share price.