The Rio Tinto Ltd (ASX: RIO) share price has enjoyed a very strong run over the past month.
On 23 October, shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner finished the day trading for $111.85. Yesterday, the mining stock closed at $126.50 a share.
That puts the Rio Tinto share price up a very healthy 13.1% over the period, far outpacing the 2.7% gains posted by the ASX 200 over this same time.
With one month to go before Christmas, the question ASX 200 investors are asking now is, what can we expect from the Rio Tinto share price heading into the holidays?
Resilient iron ore demand lifting the ASX 200 miner
Rio Tinto earns revenue from a variety of metals.
But the biggest revenue earner by far is iron ore.
Which goes a long way towards explaining the last month's strong run higher for the Rio Tinto share price.
On 23 October, iron ore was trading for US$115 per tonne. Yesterday that same tonne was trading for US$135 per tonne.
The industrial metal has outperformed most analysts' forecasts for the current quarter amid stronger-than-expected global demand for steel-making.
According to the World Steel Association, global steel production increased by 0.6% in October year on year to 150 million tonnes. That came despite a dip in steel production in China, the world's biggest iron ore consumer.
What next for the Rio Tinto share price?
Barring company-specific developments, which we'd need a working crystal ball to foresee, the Rio Tinto share price performance heading into Christmas will be significantly influenced by how the iron ore price moves.
A number of analysts remain bullish on the outlook for iron ore as the Chinese government continues to roll out stimulus measures to revive its sluggish economy and struggling property sector, which accounts for some 40% of China's steel demand.
And Citi analyst believe the Chinese government is likely to increase its stimulus efforts, causing the broker to up its forecast for the iron ore price.
According to Citi:
We now expect in our base cases that China will likely increasingly push towards fiscal expansion to engineer investment-led growth, and this time with a focus on urban village redevelopment/affordable housing to support overall property market related activity in 2024.
Citi is now forecasting the iron ore price to reach US$140 per tonne.
That kind of boost would offer further tailwinds for the Rio Tinto share price, though not necessarily in time for Christmas.
But not everyone is convinced by the China stimulus argument.
Vivek Dhar, director of mining and energy commodities at Commonwealth Bank of Australia (ASX: CBA), believes the stimulus in the middle kingdom is likely to only provide temporary relief.
Dhar said that he believes "iron ore markets are overly optimistic on steel consumption in coming months."
According to Dhar (quoted by The Australian):
We continue to believe that property developers are still quite some time away from having the confidence to boost new construction activity given current credit conditions.
We believe iron ore prices of US$100‑110 a tonne better reflect the fundamentals in China's steel market than prices above US$130 a tonne.
So, will the Rio Tinto share price keep marching higher into Christmas?
We'll be keeping an eye on those steel production figures.
