Here’s my chart of the quarterly average of the iron ore price (updated to September quarter to date):
Major miners prices earned tend to follow this chart with a lag as contracts catch up. For instance, the last quarter saw Rio and BHP enjoy a $106 per tonne average rate, a little above the average price at $102. The current quarter average so far is $94. For some notion of what this will do to profits, here is UBS:
Diversifieds: All else remaining equal, our BHP & RIO earnings estimates for CY 15 would be -5% and -13% (prev. -11% and -9%) respectively under a spot scenario. Nevertheless, RIO would trade on cheaper spot multiples at 10.9x CY 15E PE vs BHP at 12.5x CY 15E. Iron ore: The spot iron ore price is 14% below our CY 15 forecast, and implies a 49% downgrade to FMG’s FY 15E earnings and -558% to AGO.
Remember, this is versus UBS forecasts.