Shares in Australia’s top iron ore miners took a hit on Monday following another round of stimulus measures from China, which failed to meet investors’ expectations for spurring commodity demand.
Iron ore prices dropped to a two-week low after China announced a new $1.4 trillion plan on Friday, which offered no immediate economic stimulus. BHP Group, the world’s largest listed mining company, fell nearly 4%—marking its worst trading day in over six months. Rio Tinto, the world’s leading iron ore producer, lost 3.1%, hitting its lowest since mid-August. Meanwhile, Fortescue, Australia’s third-biggest iron ore producer, slid over 7%, reaching a near seven-week low.
“China’s latest stimulus package has disappointed investors, with additional setbacks from weaker inflation data and foreign direct investment figures, which highlight just how far China’s economy is from a full recovery,” commented Hebe Chen, a market analyst at IG. “This dim outlook unfortunately casts a darker shadow over Australian miners.”
Mining stocks were the heaviest drag on the Australian benchmark index, which closed down 0.4%.
With China’s economy facing ongoing challenges from debt, deflation, and weak demand, any future strain from possible U.S. tariffs could further reduce demand for key Australian exports, such as iron ore and coal. Analysts at Citi recently painted a bleak picture for iron ore prices, predicting an average of $85 per tonne by 2026, down from approximately $105 per tonne as of November 11.
Additional supply from Guinea’s Simandou project, as well as incremental increases from Australia and Brazil, combined with low demand from China’s steel industry—where efforts to cut carbon emissions are underway—are likely to put continued downward pressure on iron ore prices, according to Citi analysts.
