What happened to BC Iron’s share price?
Iron ore miner, BC Iron Ltd [ASX:BCI] is up 44% today, at $0.375. Yet even after today’s jump, the stock remains down 92% over the past year.
But it’s not just BCI suffering, the whole iron ore sector is doing it tough — to put it lightly — as the iron ore price has tumbled.
Why are BCI shares trading higher?
Today’s share price rise comes after the iron ore price had its biggest jump in two years overnight, rising 4.1% TO US$52.90 a tonne.
BC Iron also released its third quarter results today, with management revealing that thanks to cost cutting BCI is still (just) making money at current iron ore prices.
BC Iron Managing Director, Morgan Ball accepts that ‘market conditions remain challenging for iron ore producers.’
Yet, he said, ‘We are very cognisant of the external environment and will continue to make appropriate and pragmatic decisions.’
What now for BC Iron Ltd?
Unlike Atlas Iron [ASX:AGO] which ceased operations this month, BC Iron does have plenty of cash on its books. Even so, it might be smarter to for BCI to follw AGO’s lead — Citi predict the iron ore price will fall another 30% to around US$37 during 2015. With costs still above AU$50 per tonne, BCI will burn though their cash if they continue operations.
Today’s jump was nothing more than a short covering rally, and as I’ve said to Markets and Money readers before, I’m convinced that there’s still plenty more pain in store for sector.
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