Fortescue Metals shares closed at a new all-time high of $10.02 yesterday on news that Chinese manufacturing rebounded a little in November.
It is the first time every that Fortescue shares have touched and then climbed above the $10 mark.
Yesterday’s gain of nearly 3% took the year to date gain to more than 160% which is all due to the continuing fallout from the Vale’s January 25 mine dam wall disaster in Brazil.
The company is the best-placed iron ore miner for the current boomlet listed on markets around the world. It’s also a proxy on the wider Chinese economy (as is the Australian dollar and stockmarket given our exposure to China).
The manufacturing PMI was an expansionary 50.2 on Friday compared to expectations of 49.5 points. And today’s Caixin PMI was 51.8 compared to expectations of 51.5.
The irony is that iron ore prices have been trading in a narrow range around $US83 to $US88 a tonne for the past couple of months as Vale slowly brings more tonnage back online after the suspension of production in the wake of the January 25 disaster and winter production curbs restrict demand for iron ore.
The demand for Fortescue shares is not spilling over into other big Australian iron ore miners. BHP shares rose 0.3% to $38.21 on the ASX yesterday and Rio shares were up 0.6% at $97.52.