Iron Ore Market and The Australian Giants- BHP, RIO, FMG

Iron ore prices are showing a minor recovery in the international market post a deep plunge which brought down the iron ore prices in China from the level of RMB 924.50 (high in August 2019) to the level of RMB 580 (Day’s low on 28 August 2019), a drop of over 37 per cent.

Also Read: Iron Ore Prices Subdued Ahead of National Holidays in China

The prices are on a slight recovery since the beginning of September 2019 and rose to the level of RMB 690 (Day’s high on 16 September 2019), and are currently hovering slightly down at RMB 649.

Iron Ore Market Scenario

The demand for the steelmaking raw material has recently witnessed a slowdown over the intensified U.S-China trade war, and apart from that, the measures adopted by CISA to curb the prices has played a significant role in bringing down the iron ore prices.

To Know More, Do Read: CISA Crack Down on Iron Ore Prices kept RIO and BHP Under Duress

The gloomy global economic conditions coupled with China’s decreased infrastructure stimulus dragged down the steel prices in the international market, which in turn, exerted pressure on iron ore prices.

To Know More, Do Read: Iron Ore Rally Peaked-Out Over Global Economic Slowdown Concerns

However, the steel mills in China are re-stocking iron ore ahead of the national holidays, which supported the iron ore prices in the short-run. Apart from that, the decline in iron ore shipment across the Chinese ports has also provided cushion to the prices.

As per the data, 68 vessels carrying 11.26 million metric tonnes of iron ore reached the Chinese ports for the week ended on 21 September 2019, down by 2.67 million metric tonnes against the previous corresponding period shipment of 13.93 million metric tonnes.

However, the steel rebar prices in the international market are still low and, most of the steelmaking provinces in China are entering the phase two of the pollution control measure, which in turn, could exert pressure on the iron ore prices further over the short-run.

Also Read: Australian Iron Ore Miners- RIO, FMG, And BHP Dashes; Bearish Cue On Charts Persist

Australian Iron Ore Miners

The Tropical Cyclone disrupted the iron ore operations of major Australian iron ore giants such as Rio Tinto (ASX: RIO), BHP Group Limited (ASX: BHP), and Fortescue Metals (ASX: FMG), however, in the status quo, the Australian miners are moving forward to restore the production.

Despite, the plunging in the iron ore prices, the Australian miners are enjoying the appreciation in stock prices amid a rally in commodities.

BHP Group Limited (ASX: BHP)

Apart from iron ore, BHP holds a large exposure in petroleum products and other commodities such as copper and coal.

Do Read: BHP Climate Focus- A Ticket to Long-Term Sustainability?

The stock of the company rose from the level of A$34.420 (26 August 2019) to the level of A$39.340 (Day’s high on 16 September 2019), which underpinned a price appreciation of 14.29 per cent. However, the share prices of the company are taking a hit from the past few trading session and are currently at A$36.555 (as on 25 September 2019 12:10 PM AEST).

BHP Daily Chart (Source: Thomson Reuters)

On the daily chart, the support for BHP stands at A$34.259, while the major and primary hurdle for the prices is at A$40.16.

BHP delivered a total return of 7.27 per cent on an MTD basis, while the DCIOC1 (or the iron ore futures) delivered a return of 7.92 per an MTD basis. The recovery in iron ore prices outperformed the returns from the ASX-listed miner.

Also Read: BHP’s Pessimism Drags Iron Ore Down; While 62 per cent Fe Struggles to Rebound

Rio Tinto Limited (ASX: RIO)

The share prices of the company witnessed a strong beginning in September 2019, and the stock of the company rose from the level of A$82.690 (low in August 2019) to the level of A$94.220 (Day’s high on 16 September 2019), which underpinned a growth of almost 14 per cent.

However, the share prices of the company are in pressure from the past few trading sessions.

Rio Daily Chart (Source: Thomson Reuters)

On the daily chart, the support for Rio stands at A$83.167, while the primary resistance for the share prices of the company is at A$93.904.

The stock of the company delivered a total return of 6.23 per cent on an MTD basis and underperformed the returns from DCIOC1.

Also Read: Twin Shocks of Copper and Iron Ore Set Rio and BHP Uptrend on a Detour

Fortescue Metals Group Limited (ASX: FMG)

The share prices of the company have witnessed a sharp upside rally despite a slight decline in iron ore prices. The stock rose from the level of A$6.610 (low in August 2019) to the level of A$9.230 (Day’s high on 19 September 2019), which in turn marked an upside of almost 40 per cent.

FMG Daily Chart (Source: Thomson Reuters)

On the daily chart, the support for FMG stands at A$6.558, while the primary resistance is at A$8.741, which the company crossed recently, however, the prices are retesting the breached resistance.

FMG has delivered a total return of 14.02 per cent on an MTD basis, while the DCIOC1 (or the iron ore futures) delivered a return of 7.92 per an MTD basis. The stock returns outperformed the returns from both BHP and Rio Tinto along with the returns from iron ore.

Also Read: Fortescue Metals Records Bumper Profit; Dividend Pay-Out Reaches 78 Per Cent

To wrap up, the iron ore miners showed slight recovery at the beginning of the September 2019 amid slight improvement in iron ore prices; however, the steelmaking raw material fell slightly in the previous few trading sessions, which in turn, is capping the gains of Australian iron ore miners.

The iron ore market is further anticipated by industry experts to be under pressure from the slowdown in global economic conditions and falling steel prices in the international market. The upcoming holidays in China coupled with tighter phase 2 pollution control measures could also keep a check on the iron ore demand, which could further exert pressure on the iron ore prices.

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