Why is the Hawsons Iron share price tanking 9% today?

The Hawsons Iron Ltd (ASX: HIO) share price is slipping on Thursday, down 9.09% to 10 cents per share in afternoon trading

Today’s movement brings further pain to shareholders, who have had to endure a 74% decline in the Hawsons Iron share price over the past month alone.

What’s whacking the Hawsons Iron share price today?

The answer is likely to be the same issue whacking the major ASX iron ore shares today: China.

There’s no price-sensitive news out of the small-cap miner today. However, it did lodge its presentation from the Noosa Mining Investor Conference with the ASX for shareholders to review.

The bigger issue for the iron ore miner today is the ongoing discussion about China’s economic slowdown.

As we reported earlier, China’s property sector has been decimated. This had led to lower construction activity and demand for steel, which has lowered the demand for Australian iron ore.

China’s economy is also slowing because lockdowns enforced under the COVID-zero policy are disrupting industrial activity.

Over the past 18 months, this has led to a dramatic fall in the price of iron ore.

According to the Australian Financial Review (AFR), Reserve Bank deputy governor Michele Bullock says these two issues are among the bank’s top concerns for the health of the Australian economy.

What’s going on with the iron ore price?

Iron ore has gone from a record-high price of about US$240 per tonne in May 2021 to US$91.50 per tonne today.

That directly affects the earnings of every Australian iron ore business, regardless of whether they export to China specifically.

Today, Rio Tinto Limited (ASX: RIO) shares are down 0.4% to $98.21. BHP Group Ltd (ASX: BHP) shares are down 1% to $40.75. The Fortescue Metals Group Limited (ASX: FMG) share price is down 1.6% to $16.85.

Michael Slack of MCA writes on Livewire that the iron ore price could go down further due to an impending oversupply. As a result, his fund is underweight on iron ore companies.

Slack said:

Looking forward, we see growth in iron ore supply, particularly out of Australia, Brazil and Africa, exceeding growth in Chinese demand thereby pushing the iron ore market into surplus and impacting price.

If China continues along this path and allows the property sector to wallow, iron ore pricing and resource companies may suffer along with it.

Why has the Hawsons Iron share price lost 80%?

Hawsons Iron’s woes don’t just stop at the falling value of iron ore.

Some company-specific things are going on that have caused a massive drop in the share price.

As my Fool colleague Brooke reported, Hawsons announced it was pressing the pause button on its flagship project last month.

The need to preserve cash forced the decision to slow activity on the Hawson Iron Project’s bankable feasibility study (BFS).

Shareholders had a negative reaction. In fact, they went crazy. The share price tanked 62% on the day of the news and it hasn’t recovered since.

Prior to the announcement, Hawsons Iron had been one of the success stories of the S&P/ASX All Ordinaries Index (ASX: XAO) in 2022.

While most ASX shares had been falling this year, the Hawsons Iron share price had gone up 118% before the fateful news.

At today’s Noosa Mining Conference, managing director Bryan Granzien said Hawsons had a “world-class resource” project. It is located in the Braemar iron region about 60km southwest of Broken Hill.

He reminded investors that it has a current JORC 2012 Resource of 3.9 billion tonnes at 12.3 DTR% for 481 Mt of concentrate. Hawsons also has a trademarked ‘Supergrade’ iron ore product with 70% Fe.

The post Why is the Hawsons Iron share price tanking 9% today? appeared first on The Motley Fool Australia.

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More reading

• China’s property crash has decimated the iron ore price. So what’s the outlook for Rio Tinto shares?
• Own BHP shares? Here are key takeaways from the miner’s AGM
• The Fortescue share price has leapt 17% in November. Here’s why it may not last
• Why is the Fortescue share price bolting out of the gate on Wednesday?
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Motley Fool contributor Bronwyn Allen has positions in BHP Billiton Limited and Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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