Five iron ore stocks that have delivered over 100% YTD returns

Summary

  • The S&P/ASX 300 Metals & Mining index has gained more than 27% in the last one year on the back of iron ore rally.
  • Iron ore prices followed an uptrend for two years due to a supply crunch in the market.
  • Various ASX-listed iron ore miners have given significant returns in the past and are poised to become winners amid the ongoing iron ore rally.

Australia’s benchmark S&P/ASX 300 Metals & Mining index has gained more than 27% in the last one year. The index reached an all-time high of 6215.9 on Monday on the back of surging iron ore prices. The rebound in the price of the base metal snapped a five-day losing streak as steel margins recovered in China.

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Meanwhile, Dalian iron ore recorded its sharpest weekly drop in 17 months on 23 July 2021 on the concerns about China’s steel production caps. The 62% Fe fines imported to Northern China were trading at US$202.5 per tonne on 27 July 2021.

Must Read: How could the red-hot iron ore rally benefit investors?

The significant drop in iron ore prices has been noticed as various steel-producing areas of the country including Fujian, Jiangxi, Yunnan, Shandong, Jiangsu, Gansu, and Anhui have been pressurised to limit their steel production to 2020 levels amid China's strong move to curb carbon emission.

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Iron ore’s bull run started in 2019 after the supply disruptions created by the Brumadinho dam disaster in Brazil. The prices followed an uptrend for two years due to the supply crunch in the market. Currently, the prices are being supported by a better-than-expected demand recovery after the pandemic and constant production.

                         

Buzzing Trends || Top ASX-listed  iron ore stocks with over 100 per cent YTD returns

 

The future prices of iron ore would be dependent on the dynamics of demand and supply. China being a significant player in the scenario, its decision to cut the steel output to bring down the carbon emission levels could weigh on the prices of iron ore, which is the primary ingredient for steel manufacturing.

Must Read: Why are iron ore prices volatile of late?

In the meantime, the global surge in a new variant of coronavirus with a record number of cases in Britain is posing a potential threat to the demand of the base metal. China's move to tighten the grip on exorbitant commodity prices is another headwind for iron ore prices, which may diminish iron ore’s chances of hitting the US$300 per tonne mark.

However, the improvement in supply from Brazil’s Vale mine and China’s move to curb steel production may boost the supply, which in turn, may cool iron ore prices to some extent.  Analysts believe that prices are likely to stay above US$150 per tonne in the second half of 2021.

Good Read: Why is iron ore rally hurting these two sectors?   

On that note, let’s have a look at five ASX-listed iron ore stocks that have given a return of more than 125% in the last one year and could be the winners amid the ongoing iron ore rally.

Source: ASX as of 29 July 2021

Grange Resources Limited

Grange Resources Limited (ASX:GRR) is an Australia-based iron ore player that owns and operates the country's largest iron ore and pellet production business in Tasmania.

Eastern Iron Limited

Eastern Iron Limited (ASX:EFE) is an ASX-listed multi-commodity exploration company. EFE is engaged in the exploration of copper, gold, and iron ore with the flagship Nowa Nowa iron ore project in Victoria.

GWR Group Limited

GWR Group Limited (ASX:GWR) is an Australia-based iron ore producer, aiming to establish itself as a strategic minerals and advanced gold producer as well. The company holds and operates the flagship Wiluna Iron Ore Project in Australia.

Fe Limited

Fe Limited (ASX:FEL) is an emerging ASX-listed iron ore production company with a special focus on near-term, high-grade projects in Australia. The company holds the Yarram iron ore project in Australia.

Must Watch: How to pick good iron ore stocks?

Fenix Resources Limited

Fenix Resources Limited (ASX:FEX) is an Australia-based iron ore player with a flagship Iron Ridge iron ore project located in Western Australia. The project is a premium direct ship ore deposit.

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