Iron ore price ends winning streak

The iron ore price has edged lower but is holding clear of the key $US55 a tonne level.

The iron ore price has snapped a three-day winning streak, edging lower but holding clear of the key $US55 a tonne level.

Iron ore lost 0.2 per cent to $US56.40 overnight, according to The Steel Index, from $US56.50 in the previous session.

The commodity has now held above May Budget forecasts of a $US55 average price for almost three months, defying expectations of looming sharp declines in a market that remains oversupplied.

Although most analysts still expect the commodity to decline from current levels, some have scrambled to adjust bearish forecasts as prices remain resilient.

Analysts at Ord Minnett point out that shares in Fortescue Metals Group, currently trading at just under $5, imply an iron ore price of $US44, which “looks low”.

“We continue to see FMG as undervalued,” Ord Minnett said, reaffirming an Accumulate call on the stock.

“With only a week left in September, iron ore has averaged a healthy $US58.50/tonne quarter-to-date.”

The analysts expect Fortescue to announce a fall in net debt at its quarterly update next month.

In London trade, BHP Billiton shares lost 0.4 per cent, while Rio Tinto fell 1.4 per cent.