The Rio Tinto Limited (ASX: RIO) share price has seen plenty of volatility over the past year, but it's currently on the up.
Despite Rio Tinto shares dropping below $90 a few times, it has risen around 10% over the past year to a share price of $118.
Since the start of November, it has gone up by more than 30%.
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What has driven the Rio Tinto share price?
As a resources business, its short-term success is heavily linked to movements in commodity prices.
Mining costs don't typically change much from month to month. But, when the resource price goes up, this extra revenue can largely add straight onto the net profit after tax (NPAT), which is usually a good boost for investor confidence about the business. Bigger profits can fund larger dividends.
Iron ore is the key profit-generating segment for the business, so the strengthening iron ore price has been very promising for the company's profitability.
According to Commsec, the iron ore price has reached US$117. It's steadily climbing towards US$120 per share.
Is 2023 promising?
In my opinion, the key factor to decide whether Rio Tinto shares have a good year or not will be China. How the Asian superpower's economy performs and the demand for resources could be critical for Rio Tinto's earnings.
Lockdowns in the country did limit some economic activity, but the reopening from restrictions seems to be a one-way decision.
China is also seemingly looking to support the Chinese real estate sector. Indeed, it was reported this week by Reuters that the Chinese central bank, the People's Bank of China, said that "for cities where the selling prices of new homes fall month-on-month and year-on-year for three consecutive months, the floor on mortgage rates can be lowered or abolished for first-time home buyers in phases."
A strong Chinese economy could also lead to good prices for some of Rio Tinto's other commodities, such as copper.
Is the Rio Tinto share price a buy?
After a strong run of the miner in recent times, I think it would be wise to be wary about what price to pay right now.
Commodity businesses are typically cyclical because of the changing resource prices, so I'd rather invest when commodity prices are weaker than when the iron ore price is strengthening.
According to Commsec, the Rio Tinto share price is valued at 11 times FY23's estimated earnings with a potential grossed-up dividend yield of 8.5% in 2023.
Analysts are mixed on the ASX mining share. Of the 17 analysts covering Rio Tinto covered by Commsec, seven rate it as a buy, eight as holds and two are sells.
