Macquarie Bank this morning cut its iron ore price forecast to $54 average and its Australian dollar year end forecast to $67 from $77:
We have significantly reduced our spot iron ore price forecast for 2015-16 to $54/t and $58/t CFR China (62% basis) respectively from $68/t and $65/t previously, while our Q3 2015 forecast drops to $48/t.
Suddenly I’m a bull! On RIO and BHP:
A bigger impact for RIO than BHP on earnings: Incorporating the commodity and FX changes has translated to material earnings downgrades for RIO and BHP in 2015. We cut our CY15 earnings forecasts for RIO by 28% and by 11% for BHP. The weaker A$ offsets the bulk of the lower ironore price in CY16 with RIO’s earnings falling 6% and BHP just 2%. Beyond CY16 we have upgraded earnings by 2-3% due to the lower exchange rates.
Target price increased. Good one!
And for FMG:
We have made a number of changes to our earnings forecasts for FMG after incorporating our iron-ore price and FX changes. We cut our FY15 earnings forecast by 33% and our FY16 estimates by 22%. Our forecasts rise significantly in FY17 and FY18, however incorporating higher long-term operating and sustained capital costs has offset the improved earnings outlook with our price target falling 19% to $2.10.
Earnings?
