Morning Report Tuesday 11 March 2014
Iron Ore collapses 8.3% overnight, is it time to be brave?
Please see our Market Matters video update on Commodities and China.
The Iron Ore price has fallen over 20% this year but the Iron Ore stocks have only followed in the last 3 weeks e.g. Fortescue (FMG) -21% & RIO Tinto (RIO) -14%.
New production from BHP, RIO and FMG are significant contributing factors to the fall. Months ago, BHP & RIO said the fair Iron Ore price is US$100/t, so why is there any surprise?
I am looking at this pullback to buy FMG, but I’m well aware the last time Iron Ore broke US$100/tonne, FMG was under $4 – see chart 2.
FMG has improved as a company over the last few years, paying down debt at very rapid rate and paying a 10c fully franked dividend in February.
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