Iron ore upgrades lift Fortescue, BHP, Mineral Resources and others

Fortescue shares touched new highs on Tuesday and Rio Tinto crossed the $100 mark as analysts upgraded iron ore forecasts.

Fortescue shares have touched new highs.

Fortescue Metals shares briefly touched new highs of $15.25 on Tuesday and Rio Tinto again crossed the $100 mark as analysts upgraded iron ore forecasts on the back of renewed problems for Vale in Brazil.

Australian iron ore miners enjoyed a strong day on the market, with Mineral Resources touching a breakout price of $20.985, before softening to close up $1.10 at $20.79.

BHP closed up 3.6 per cent at $37.64, with Rio Tinto up 2.8 per cent at $101.37.

The surge comes amid heightened expectations of another bumper dividend season for the iron ore miners as the end of the financial year nears with iron ore again on a bull run.

 

The latest problems for Vale, which have seen a key mining hub worth 12 per cent of its annual production temporarily closed amid concerns the coronavirus has spread into its workforce, have pushed iron ore back above $US100 a tonne and helped analysts upgrade price forecasts for the remainder of the year.

JPMorgan lifted its iron ore forecast by 11 per cent to an average $US91 a tonne for 2020, and by 10 per cent to $US80 in 2021, saying the “stars have aligned” for Australian exporters as stronger than expected Chinese demand has matched with weak Brazilian exports, declining port stocks and lack of response from marginal producers outside Australia.

Analyst Lyndon Fagan said he expected prices to soften in the second half of the year, but noted that that may depend on whether Vale faced further problems at its Brazilian mines.

“Should COVID-19 impacts last longer, there is a realistic proposition that prices will continue to trade higher,” he said.

Mr Fagan upgraded his growth forecasts for China’s steel production to 1.2 per cent in 2020, from earlier expectations it would fall 1.5 per cent, based on stronger-than-expected output in April, a government stimulus package and promising demand recovery.

He said he expected Fortescue to be the primary beneficiary.