What happened to Rio Tinto’s share price?
Shares of Rio Tinto Ltd [ASX:RIO] slumped more than 4.1% today as the iron ore price retreated from recent highs.
Why did RIO shares drop?
According to a report from Bloomberg, iron ore traded on China’s Dalian Commodity Exchange was down as much as 9% from Tuesday’s high.
The US dollar priced iron ore, delivered to Qingdao, China, yesterday fell more than 3% from the previous day.
The rising iron ore price has been a boon for the big Aussie iron ore miners, including Rio Tinto. But it has benefited the other big iron ore miners, BHP Billiton Ltd [ASX:BHP] and Fortescue Metals Group Ltd [ASX:FMG].
The Rio Tinto share price is up over 52% since February last year. That’s broadly in line with the big surge in the iron ore price itself.
But now there are fears that the recent iron ore price rally may be overdone. If it is, it could spell trouble for the three big Aussie iron ore miners — and trouble for investors who own the shares.
What now for Rio Tinto Ltd?
Whenever a commodity price and stock price rise so high in such a short time, it should always serve as a warning to investors. Those who bought in while the price was lower may start to see the recent price fall as an excuse to sell and lock in a profit. If so, that could result in short-term pressure for the stock, making a buying decision now even riskier than normal.
By Kris Sayce