Rebar and Dalian futures are flattish today in China but iron ore miners are still enjoying a little bounce on overnight action. The equity price rebound so far has been pretty weak and a quick take from UBS shows why. At current price levels the hit to earnings for miners is still big:
All else remaining equal, our BHP & RIO earnings estimates for CY 15 would be -2% and -6% respectively under a spot scenario. Nevertheless, RIO would trade on cheaper spot multiples at 10.3x CY 15E PE vs BHP at 12.6x CY 15E. Iron ore: The spot iron ore price is 5% below our CY 15 forecast, and implies a 38% downgrade to FMG’s FY 15E earnings and -143% to AGO.