Iron ore price may fall further as experts warn of China trade risk

Shareholders in ASX 200 companies heavily reliant on the iron ore price, like BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO), could be a little worried after the Australian Strategic Policy Institute (ASPI) said Australia’s iron ore exports with China may be at risk.

At close of trade yesterday, shares in BHP ended the day at $37.75 – up 0.59%. The Rio share price closed yesterday at $95.71 – up 0.49%. The S&P/ASX 200 Index (ASX: XJO) ended the day 0.35% higher.

Let’s take a closer look.

‘…would (the metal) join the long list of lesser Australian exports subject to Chinese coercion?’

In a report for ASPI, investment analyst David Uren argues the falling iron ore price represents an opportunity for the Chinese government to finally free itself from its dependence on Australia’s iron ore.

Australia is the cheapest and closest iron ore exporter to China and is one of the few surviving exports between the two nations. The People’s Republic has placed heavy tariffs on Australian barley, beef, wine, and seafood and completely banned Australian coal.