The Rio Tinto share price retreated by more than 1.6% in London and Australia after the company downgraded its iron ore target again. The stock is trading at 5,027p, which was slightly below this week’s high of 5,165p.
Rio Tinto iron ore exports
Rio Tinto is one of the biggest miners in the world. The company operates in about 35 countries where it mines important metals like iron ore, aluminium, copper, borates, lithium, salt, and titanium oxide. The company claims that these products are essential for human progress.
The Rio Tinto share price diverged with other mining companies as its stock declined by more than 1% on Friday. This happened after the company downgraded its iron ore production and export in Australia. It blamed the situation to the tight labour market in Australia.
Precisely, the company expects that its iron exports from Western Australia will be between 320m and 325m tonnes. This was the lower end of the previous target of 325m and 340m tonnes.
This situation has been made worse because of Australia’s Covid pandemic. In a bid to limit the spread, regional governments limited movements between states. As such, it became incredibly difficult for the company to hire miners from across the country. As such, Rio Tinto expects to ship less iron ore this year than it did in 2020.
Another reason why the Rio Tinto share price retreated was that the price of iron ore has declined substantially in the past few weeks. A tonne of iron ore is selling at $122, which is lower than the peak of $233. Therefore, the company will have to contend with lower volumes and lower prices.
The stock has also struggled because of substantial challenges the company is facing. For example, there are hiccups about its proposed copper mine in Arizona. There are also probes about sexual harassment in Australian mines and an over-budget project in Mongolia. All these have made the RIO share price to underperform peers like BHP and Glencore.
Rio Tinto share price
The daily chart shows that the Rio Tinto share price hit a major resistance level at 5,151p on Thursday as the price rebounded. A closer look at the chart shows that it has formed what looks like a double-top pattern, which is usually a bearish sign. The MACD has been in a bullish trend while the price has moved above the 50-day moving average.
Therefore, because of the double-top pattern, there is a likelihood that the price will see further declines below the support level at 5,000p. A bullish break-out, on the other hand, will be validated if the price moves above the key resistance level at 5,151p.
