The Rio Tinto Ltd (ASX: RIO) share price declined in April amid a drop in the iron ore price.
The company's share price fell 6.6% from $120.14 on 31 March to $112.25 at market close on 28 April. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) fell 2.6% in the same time frame. In Tuesday's trade, Rio shares slid 1% to $11.14.
Let's take a look at what weighed on the Rio Tinto share price in April.
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What happened?
Rio Tinto is a major iron ore explorer. The company also produces copper, bauxite and aluminum. But iron ore is its largest revenue earner.
The iron ore price fell 17% from US$127 a tonne to US$105 a tonne during April, trading economics data shows.
Iron ore prices fell amid weaker demand from China. China is the world's largest importer of the commodity, used to make steel.
Kallanish Commodities analyst Tomas Gutierrez told Bloomberg the iron ore price was "overhyped" when it rallied from late last year until March. Iron ore was trading at US$81.5 per tonne on 1 November 2022 before soaring 65% to $US134.50 on 15 March.
Commenting on steel demand from China, he added:
Developers are very reluctant to start new projects outside of the top-tier cities, and that's where the bulk of steel demand used to come from.
Rio Tinto reported record iron ore exports in the first quarter of calendar year 2023. The company shipped 82.5 million tonnes of iron ore in the March quarter, up 16% on the first quarter of 2022.
Rio's 2023 guidance for iron ore shipments remains unchanged, however, copper production has been slightly lowered to 590 to 640 thousand tonnes.
Commenting on the results, Rio Tinto CEO Jakob Stausholm said:
We continue to make steady progress with our highest ever first quarter shipments achieved in the Pilbara iron ore business.
Looking ahead, the team at Goldman has a "buy rating" on Rio Tinto shares with a $136.20 price target.
Rio Tinto share price snapshot
The Rio Tinto share price has slid 2.16% in the last year.
Rio has a market capitalisation of about $41.26 billion based on the last closing price.
