The gradual recovery in global economies coupled with curtailed supply are likely to be supportive of Australia’s iron ore prices in the coming months, writes Luke Smith, Portfolio Manager for Ausbil Investment Management.
The steel-making ingredient that burst out of the blocks with the onset of the China boom during the early 2000s, has defied the sceptics and generated an earnings bonanza for the mining heavyweights that dominate the industry. Gavin Wendt digs into the dynamics driving the iron ore price.
In news that will further rattle global iron ore prices, the office that enforces labour laws in Brazil’s Para state is stepping up an investigation into potential shortcomings in the way mining giant Vale has protected its workers from the coronavirus.
Global iron ore prices have surged by nearly 5% on news that Vale, the big Brazilian miner, had been forced to shut three mines in its southern mining complex because COVID-19 infections were spreading.
September quarter production and shipments were broadly in line with Morgan Stanley's expectations. Revenue realisation was softer, which raises some downside risk to the broker's December quarter forecasts.
Morgan Stanley acknowledges Fortescue Metals is a high-quality company but the stock is now 13% above the target. The broker expects the headline iron ore price and 58% price realisation will recede from current highs in the first half of 2020 as supply rises.