Morning Report Tuesday 7 October 2014
Iron Ore has plunged 40% this year, but we still feel BHP will fall another 30%
The question I get asked the most by subscribers is “what do you think of Fortescue here?” Hopefully this is a question focused around entry and not around hope of a stock that has fallen over 45% since February. RIO was up 6.6% overseas as it considers a merger with Glencore to create the world’s largest Iron Ore producer, making today an optimum time to revisit the sector. Iron-ore prices have plunged 41% this year and after recent comments from BHP saying it plans to expand production, coupled with a Chinese economy returning to normality, I see no short / medium term change in this trend. We have to remain very open minded as to where these stocks may fall. Vale, the largest Iron Ore producer in the world had fallen over 70% since early 2011. Overall I remain only a trader of these stocks, not an investor.
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