What Does Rio Tinto Do?
Rio Tinto [ASX:RIO] is one of the world’s largest miners. Its operations involve exploration, mine development plus production and processing. The majority of its earnings come from iron ore. The company is listed in both Australia and the UK.
What is the chart telling us?
What’s Happening to the Rio Tinto Share Price?
Here is a monthly chart of the stock…
You can see Rio is making lower tops on the chart. It’s down another 3% in today’s trade at the time of writing. At $50.17, Rio is approaching the former lows it made in 2012 and 2013. Should it break below $48, that would be a very strong sign of ongoing weakness.
The company announced it’s preparing its first shipment of alumimium from a modernised facility in Canada yesterday. The new facility will increase production 48%.
However, the market shrugged off the news because Rio’s problem is the iron ore price, which is now below US$50 a tonne once again.
What Now for Rio Tinto?
Fellow DR editor Greg Canavan has been analysing the the iron ore price for many years. In a recent update, he told subscribers:
‘The iron ore price is in free fall and the economics remain horrendous. Rising supply and falling demand, it’s a recipe for a disaster.
‘I warned you this would happen a few weeks ago. Indeed, I expect iron ore to go into the US$30s during this bear market.’
The chart is suggesting Greg’s pessimism of this sector is well placed. If you’d like to see more of Greg’s analysis, click here.
Editor, The Daily Reckoning