The Funeral Bell rings for junior Iron Ore stocks

Nicholas Forsyth

Market Matters

The Iron Ore sector is getting battered on both the supply and demand side of the equation. Local heavyweights, BHP and RIO are driving the price decline with massive increased supply. This sector is only providing some excellent trading opportunities. Short term I think we may be close to an inflexion point for the bulk commodity. At current prices, 75% of iron ore produced is at, or close to loss making. How long will the big producers be prepared to suffer these margins? I can see a bounce in iron ore back over $US60/tonne. •RIO and BHP still have some room at current levels, BUT very little if they intend to increase dividends. •FMG and Vale are basically at breakeven. Vale has bounced 11% in the past 3 days. •The Junior Iron Ore miners appear to be living on borrowed time. Full read: (VIEW LINK)


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Nicholas Forsyth
Director
Market Matters

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