Although it’s going unreported as usual, there is a spectacular bear market developing in iron ore equities:
Note the juniors leading the way, with the likes of Atlas and Mt Gibson down 75% from 2011 peaks and the majors down between 30-45%. So is this horror run over? No.
The reason why we all know well and it was confirmed again today with the release of FMG’s first quarter production report:
In the three months to march 31, Fortescue’s total iron shipments came in at 20.2 million tonnes, a marked 60 per cent lift on the 12.6 million tonnes shipped in the previous corresponding quarter.
Fortescue said it maintained its production and shipping guidance of between 82 and 84 million tonnes for the full year.
From the fourth quarter, FMG will be shipping almost double these figures and prices will be sinking as if half the shipment had fallen overboard.
Clearly, equity prices are leading actual iron ore price declines and here will no doubt be rebounds as hope springs again that China can buy infinite amounts of the stuff but I do not think that this bear market will be over until RIO is trading near the current loss levels of AGO and MGX.
