The iron ore price fell 1.55% in overnight trading to close the session at US$111.31 per tonne.
This is weighing on iron ore shares today, with many underperforming the S&P/ASX 200 Index (ASX: XJO).
The ASX 200 is up 0.78% at the time of writing.
The BHP Group Ltd (ASX: BHP) share price is up 0.53% to $43.71.
Mineral Resources Ltd (ASX: MIN) shares are only just in the green, up 0.053% to $56.36 apiece.
The Fortescue Ltd (ASX: FMG) share price is down 0.23% to $21.77.
Champion Iron Ltd (ASX: CIA) shares are 0.31% lower at $6.45.
The Rio Tinto Ltd (ASX: RIO) share price is an outlier, up 0.87% at $120.94.
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What's happening with the iron ore price this week?
Analysts at Trading Economics say a four-day rally last week inspired some profit-taking.
Secondly, investors are continuing to assess the outlook for demand in China.
China is the world's biggest consumer of iron ore.
The country imports 76% of the iron ore dug out of the ground worldwide every year. Therefore, the rate of demand there has a very significant influence on the iron ore price.
Australia is one of the world's biggest producers of iron ore. China's custom was worth $115.6 billion in export earnings to us in 2023, according to the Department of Resources.
That's why we tend to see a pullback in ASX iron ore shares when the commodity price falls or we hear negative news out of China.
According to Trading Economics analysis of last night's fall in the iron ore price:
Data also pointed to rising iron ore inventories on Chinese ports, signaling weaker demand from steel mills for metal production. Markets now look ahead to the Third Plenum later in July where top Chinese officials are expected to tackle plans on "comprehensively deepening reform and advancing Chinese modernization," with investors looking for further policy support for the property sector.
Will the iron ore price rise or fall from here?
Westpac Banking Corp (ASX: WBC) has released its latest forecasts for various commodities.
Westpac Senior Economist Justin Smirk expects the 62% spot iron ore price to fall from here.
He tips the iron ore price will dip to an average of US$102 per tonne in the September quarter and US$90 per tonne in the December quarter.
He sees a further decline to between US$85 per tonne and US$87 per tonne from the March 2025 quarter to the March 2026 quarter.
This time next year, Smirk thinks the iron ore price will be averaging US$85 per tonne.
The Australian Government also forecasts the commodity's value to fall. Its latest official forecast points to a fall in the 62% spot price to a nominal average of US$96 per tonne in 2024.
It predicts a further decline to a nominal average of US$84 per tonne in 2025 and US$77 per tonne in 2026.
This will contribute to reduced iron ore export earnings from $138 billion in 2023–24 to $114 billion in 2024–25 and $102 billion in 2025–26.
What will this do to ASX mining share prices?
The iron ore price has a direct impact on the earnings of ASX 200 miners.
Miners are price takers, so their earnings are subject to global commodity values. Production volumes also have an impact, of course.
Usually, when the commodity price is rising or falling, ASX mining share prices follow suit.
