An overnight slump in iron ore prices put a dent in London’s heavyweight miners in early trading this morning.
Iron ore prices have fallen almost 6 per cent since the London stock market closed yesterday evening amid continued sluggish demand from China, the world’s biggest consumer of raw materials.
Chinese steel mills have been under strict orders from Beijing to limit their production in recent months as the country battles to get its pollution levels under control.
Investors are also worried that a rapid rise in coronavirus cases in Asia may also hurt demand as the year wears on.
Amid all that, iron ore prices on the Dalian Commodity Exchange in China, for September delivery, fell nearly 6 per cent to $154.54 a tonne — their cheapest since early April.
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That weighed on the mining sector, especially the bigger iron ore miners. Rio Tinto shares reversed 214p, or 3.4 per cent, to £60.78; Anglo American dropped 89p, or 2.6 per cent, to £33.55; and BHP shed 59p, or 2.5 per cent, to £23.11.
They held back the FTSE 100, which barely moved in morning trading as it remained at 7,123.03.
That was despite a 5p, or 4.7 per cent, rally in Rolls-Royce shares, which rose to 109½p after the jet engine maker swung to a surprise profit in the first half of the year.
Shares in Savills, the estate agent, gained 55p, or 4.7 per cent, to £12.15 following a record first-half performance as the UK property market caught fire thanks to the extension of the stamp duty cut and cheap mortgages.
Though analysts took a dislike to Lloyds Banking Group, the nation’s biggest mortgage lender, exactly because of those cheap mortgages. Goldman Sachs downgraded the shares to “sell”, sending them 1¾p, or 3.7 per cent, lower to 45½p.