The Fortescue Metals Group Ltd (ASX: FMG) share price looked as if it was going to break out after a record close of $26.50 on 29 July.
Previously, the Fortescue share price spent 7 months trading sideways after an earlier high of $26.27 on 8 January.
Unfortunately, since their last record close, Fortescue shares have staged a sharp U-turn, tumbling more than 14% in the past 7 trading sessions to $22.76 at the time of writing.
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What triggered the sharp selloff?
The sharp decline in iron ore prices has underscored the weakness across ASX iron ore shares.
Two weeks ago, iron ore prices were well above the US$200/tonne mark.
However, steel production mandates from China have seen prices rapidly pull back, sliding to US$172/tonne according to Market Index.
The sharp collapse in iron ore prices saw the Fortescue share price slide 6.06% to $24.90 on 30 July.
According to Mining.com, China has imposed output limits on its steel mills to ensure this year's production is no more than 2020 figures.
However, steel output grew more than 12% in the first-half compared to 2020, meaning a significant cutback would be needed in the second-half.
Mining.com quoted analysts from Huatai Futures which said, "Domestic consumption (for iron ore) is weakening significantly… Due to different perception of crude steel output cuts, iron ore prices have been fluctuated recently".
"Under the current strict implementations of steel production controls, high iron ore prices are not seen to be supported," Huatai Futures added.
Fortescue share price slides to 1-month low
The Fortescue share price has given back a month worth of gains thanks to the free fall in iron ore prices.
This follows a pleasing June quarterly and full-year FY21 update on 29 July.
According to the release, Fortescue delivered 1282.2 million tonnes of iron ore shipments in FY21, topping its guidance of 182 million tonnes.
In addition, the company received US$168/dry metric tonne (dmt) for the quarter and US$135/dmt for FY21.
Many investors will tune in to the August reporting season for a greater insight into how Fortescue has performed over the past financial year and whether or not any special dividends are up for grabs.
Fortescue is expected to deliver its full-year FY21 results on 30 August and here's a peep into what investors should look out for.
