Australian iron ore giants' shares sink on disappointing China stimulus

BHP

11/11/2024 06:24

Nov 11 (Reuters) - Shares in Australia's iron ore miners
slumped on Monday after another round of stimulus measures by
their top customer China disappointed investors who had hoped
for measures that would boost commodities demand.
    Iron ore prices slid to their lowest in more than two weeks
on Monday after China's latest $1.4 trillion package unveiled on
Friday offered no direct economic stimulus.
    BHP Group  BHP.AX , the world's largest listed miner, lost
around 4% in its worst day in more than six months, while the
world's biggest iron ore producer Rio Tinto  RIO.AX  shed 3.1%
to clock its worst day since mid-August.
    Fortescue  FMG.AX , Australia's third-biggest and the
world's fourth-largest iron ore producer, ended the day more
than 7% in the red at its near seven-week low.
    "Not only has China's recent stimulus package fallen short
of investor expectations, but the weekend's fresh
disappointments from the inflation report and FDI data have also
reinforced the view that China is still far from stabilizing its
beleaguered economy," Hebe Chen, a market analyst at IG, said.
    "This gloomy outlook, unfortunately, casts an even darker
cloud over Australian miners."
    Mining stocks were the biggest drag on the Australian
benchmark index  .AXJO , which ended the session 0.4% lower.
    A potential hit to the Chinese economy, already plagued by
debt, deflation, and weak demand, from threatened U.S. tariffs,
could also hurt demand for Australia's biggest exports to China
- iron ore and coal.
    Analysts at Citi last week forecast a grim near-term outlook
for iron ore prices, expecting iron ore to average $85 per tonne
in 2026 down from roughly $105 per tonne on Nov. 11.
    Additional supply from Simandou in Guinea, incremental
supply from Australia and Brazil, and overall weak demand from
Chinese customers at a time when steel producers are trying to
reduce their carbon emissions will pressure iron ore prices,
Citi analysts said.
    

 (Reporting by Sameer Manekar and Sneha Kumar in Bengaluru;
Editing by Sonali Paul)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))