The share prices of major ASX 200 iron ore companies dipped this morning amid reduced demand for steel in China and a sell-off in the spot and futures prices of iron ore.
The BHP Group Ltd (ASX: BHP) share price is down 2.53% to $40.70 per share. Meanwhile, the Fortescue Metals Group Ltd (ASX: FMG) share price is 2.37% lower at $18.50 each.
The S&P/ASX 200 Materials Index (ASX: XMJ) is also down 1.31% so far today.
Let's detail what's challenging ASX 200 iron ore shares this morning.
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Headwinds from reduced steel demand, iron ore futures and spot prices
The price of iron ore futures contracts came under fire today, with prices falling on China's Dalian Commodity Exchange, as originally reported by Mining Weekly.
Prices fell 4.1% to 688.50 Chinese yuan a tonne ($AU145.12). This is the lowest level since 23 August.
Meanwhile, on the Singapore Exchange, the price of iron ore futures contracts dropped 3.4% to $US98.40 a tonne ($AU143.37).
On a more fundamental level, the iron ore spot price dropped 4.39% today to $US105.28 a tonne ($AU153.41). That represents a 24.6% loss over the last six months, according to MarketsInsider.
Iron ore is furnaced into steel, which China needs to construct its massive real estate and infrastructure projects.
However, with China pursuing its zero-covid policy, the demand for steel has contracted significantly, with SP Global stating demand will likely remain low for the rest of CY22 due to the disruptions caused by the virus.
