We retain our positive ratings on FMG and RIO and suggest current iron-ore price weakness could present and excellent buying opportunity. Our proprietary port data has confirmed FMG shipments are running ahead of our forecasts, while BHP continue to lag and could miss FY16 shipment guidance.
Iron-ore price pull back was expected and could present an opportunity: Spot iron-ore prices have fallen back to US$50/t, down ~30% or US$20/t since the high of US$70/t in mid April. We had expected a pull back in iron-ore prices and today’s Commodities Comment outlines the key drivers behind the pull back and why we remain confident that any overshoot below US$50/t presents a buying opportunity.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
