Why the Fortescue and BHP share prices are sinking this week

China takes aim against "unreasonably priced" commodity prices, sending the BHP Group Ltd (ASX: BHP) share price and iron ore miners lower

| More on:
Downward red arrow with business man sliding down it signifying falling asx share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

China's most-traded iron ore futures tumbled as much as 8% on Wednesday to hit ~1,100 yuan/tonne. This comes as its state council vowed to curb the unreasonable rise in commodity prices. Consequently, the BHP Group Ltd (ASX: BHP) share price slumped 3.42% on Wednesday, while the Fortescue Metals Group Limited (ASX: FMG) share price shed a similar 3.14%. 

The fall has continued today. At the time of writing, the BHP share price is trading 1.51% lower to $48.06. At the same time, Fortescue is down 0.22% to $22.78. 

China to stabilise its commodity market 

Steel, iron ore, and copper prices have surged in the last 12-months. This has been fueled by an increase in global liquidity, supply-side constraints, and post-lockdown recoveries. China has been a driving force behind the uplift in commodity prices, with commodity hungry investments in sectors such as technology, infrastructure, and transport. 

According to a statement released after a State Council meeting, China will look to strengthen the management of both supply and demand-side factors to curb "unreasonable" increases in commodity prices and prevent the pass-through to consumers. 

The meeting reported a focus on adjustments on trade and stockpiling, reinforced inspections on behaviours that bid up prices, and a crackdown on malicious trading. 

The country also urged coal producers to lift production to meet peak demand in summer. 

This caused China's iron ore futures to tumble as much as 8%, with other materials including coking coal, thermal coal, hot-rolled coil, and steel rebar futures to slide between 5.5% and 6.8%. 

Are the Fortescue and BHP share prices in trouble? 

The Fortescue and BHP share prices are arguably iron ore price proxies. With iron ore surging to never before seen prices, iron ore miners have followed suit, soaring to all-time record highs alongside market-leading dividends. 

China's policies are still in their early days, with iron ore prices still sitting at record levels, above US$200/tonne. 

To add some perspective, iron ore prices were fetching around US$160/tonne at the start of the year. In September 2020, they were fetching US$120/tonne and US$90/tonne before COVID-19 hit in March last year. Iron ore prices have truly come a long way. 

Earlier in March, China took aim against its industrial hub, Tangshan, with new emission policies put in place to limit or halt production. This saw the BHP share price tip to $44 in late March. However, it wasn't long before its shares regained losses to set a new all-time record high of $51.82 by 11 May. 

Clearly, China's announcements can have an immediate push-pull effect on Fortescue and BHP shares, or rather, market sentiment towards ASX iron ore miners. However, it may not necessarily have an effect on iron ore prices in the short to medium term. 

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Kerry Sun 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.

More on Share Market News

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares finished the trading week on a high this Friday.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Broker looking at the share price.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Share Gainers

Why ARB, Block, Mayne Pharma, and Paladin Energy shares are charging higher today

These shares are having a strong finish to the week. But why?

Read more »

A woman puts her hands up as she smashes and breaks through a glass ceiling.
Share Gainers

How these 5 ASX 200 stocks are smashing the benchmark this week

These fives ASX 200 stocks have made some very happy shareholders this week. Here’s how.

Read more »

Bored man sitting at his desk with his laptop.
Share Fallers

Why Catalyst Metals, Duratec, Nufarm, and Rio Tinto shares are dropping today

These shares are ending the week in the red. But why?

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Broker Notes

After its strategy day, what does Macquarie think Wesfarmers shares are worth?

Let's see what the broker is saying about this blue chip.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »