A pullback in iron ore prices could weigh on these shares today…
The post Why BHP, Fortescue, & Rio Tinto shares could tumble today appeared first on The Motley Fool Australia. –
This follows another pullback in the iron ore price during overnight trade.
Unfortunately for these mining giants, the iron ore price came crashing down to Earth during overnight trade.
According to Metal Bulletin, the catalyst for this weakness was Chinese authorities taking a stricter stance against steelmakers on steel production curbs and the start of sintering restrictions.
This ultimately led to the benchmark iron ore price falling a disappointing US$13.55 a tonne or 9.3% to US$131.50 a tonne.
It was a similar story for lower grade 58% fines iron ore, which fell 9% or US$9.84 a tonne to US$104.70 a tonne.
What now for BHP, Fortescue, and Rio Tinto shares?
Where BHP, Fortescue, and Rio Tinto shares go next will depend largely on what happens with the iron ore price.
Given how much iron ore contributes to their sales, higher prices have boosted their profits and underpinned generous dividend payments.
If there isn’t a rebound in the steel making ingredient in the near term, it could lead to revisions to earnings estimates for the miner.
For example, Goldman Sachs is currently forecasting an average iron ore price of US$178 a tonne in FY 2022 and then US$140 a tonne in FY 2023. If prices don’t improve soon, it seems unlikely that they will average those levels during the coming financial years.
This could mean that these miners won’t be in a position to deliver on the broker’s forecasts, potentially putting their shares under pressure.
Though, as we have seen in the past, the iron ore price has a habit of surprising to the upside. So don’t count it out just yet.
The post Why BHP, Fortescue, & Rio Tinto shares could tumble today appeared first on The Motley Fool Australia.
Should you invest $1,000 in BHP right now?
Before you consider BHP, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and BHP wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
How does the BHP (ASX:BHP) dividend compare to its sector?
Rio Tinto (ASX:RIO) share price stumbles on geopolitical instability
Why BlueBet, Fortescue, Hansen, & Pro Medicus shares are sinking
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.