leadf
logo-loader
viewFortescue Metals Group

Iron ore prices hit seven year highs as Chinese economy comes roaring back

Iron ore is a critical ingredient in the manufacture of steel

Fortescue Metals Group -

The Chinese lockdown ended in May.

That’s plenty time for the country to have fired its economy back up and got things rolling again.

So, while in the in the Western world market sentiment is moving around on vaccine news even as people in Los Angeles are banned from walking in the street on safety grounds, in China a real economic is already well underway.

That’s been evident in the commodity markets for some time, and was underscored this week by the rise in the iron ore price to a seven year high.

Composite PMI data for China returned a reading of 57.5 in November, up from 55.7 in October, representing the steepest increase in total Chinese output since March 2010.

Commodities like copper and iron ore are much in demand to provide material for the manufacturing sector and, in what must be seen as an encouraging development by the Chinese government, domestic demand for white goods has soared.

Add to that demand driven by the huge ongoing infrastructure projects in the country, and it begins to be clear why China accounts for roughly 76% of the world’s seaborne iron ore imports in the first nine months of 2020.

The knock-on effects of this are considerable, particularly in Australia, where much of the imported iron ore supply comes from.

Thus iron ore export value from Australia rose by just over 4% month on month to A$11bn, according to data cited by Bloomberg.

This in turn has helped the miners that produce the commodity. Shares in Fortescue Metals (ASX:FMG), Rio Tinto (LON:RIO)(ASX:RIO) and BHP Group Ltd (LON:BHP)(ASX:BHP) all moved higher on the news.

In London, Anglo American (LON:AAL), which has major interests in South Africa, also ticked up.

And the positivity also fed down to the lower ends of the market too, both in Australia and elsewhere.

Thus shares in Alien Metals (LON:UFO), which has the promising Hammersley project in Australia, rose by nearly 4%, shares in Zanaga Iron Ore (LON:ZOIC) rose 11% on the news, while buyers also came in for Anglo Pacific Group PLC (LON:APF), Fenix Resources Ltd (ASX:FEX), Fe Limited (ASX:FEL) (FRA:B4T), Black Iron Inc (TSE:BKI), Macarthur Minerals Ltd (ASX:MIO) (CVE:MMS) (OTCQB:MMSDF) and Ferrexpo (LON:FXPO).

The positivity even reached Red Rock Resources Ltd (LON:RRR), which has some exposure via its interest in Jupiter Mines and the Mt Ida iron ore deposit in Australia, which is likely to be spun out next year.

Quick facts: Fortescue Metals Group

Price: 24.83 AUD

ASX:FMG
Market: ASX
Market Cap: $76.45 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Great Bear Resources releases 7 new drill holes from LP fault that show high...

Great Bear Resources (CVE: GBR- OTCQX: GTBAF) CEO Chris Taylor joined Steve Darling from Proactive to share details about 7 new drill holes from the LP Fault. These results part of their 25-million-dollar 2021 exploration program. Taylor telling Proactive they published 227 LP Fault drill...

1 hour, 56 minutes ago

3 min read