Iron ore has entered a bull market, according to RBC Capital Markets. The investment bank is bullish for September, as it expects Chinese mills to boost steel output.
Have a look at the graph below. It shows the iron ore spot price for China’s Qingdao port (white) and the 62% fine ore index (orange).
It does look promising, doesn’t it? Maybe iron ore has found its fall. As reported by The Australian Financial Review:
‘Despite the collapse in iron ore prices through the June quarter, “fundamentals continue to tell a different story, at least directionally”, according to a June 28 report from RBC Capital Markets. The broker has lowered its third quarter price forecast to $US70 a tonne for the remainder of the year, similar to the first-half average of $US75.’
What now for iron ore?
Is it time to rush back into iron ore miners?
Well, it depends. I wouldn’t recommend speculating on short-term demand. How can you predict if Chinese importers will need more or less iron ore month to month?
If you want to play that guessing game, don’t trade more than you can afford to loss.
Instead, if you have a long-term outlook, then maybe now is a good time to think about iron ore miners. Sure, the commodity might drop from here. But in the long run, China and other nations will continue to demand iron ore and steel, building infrastructure for their growing urban populations.
Junior Analyst, Markets & Money
PS: Investing in equities isn’t just about picking the right stocks. It’s also about avoiding the wrong ones. Vern Gowdie, our award-winning financial advisor, believes there are five stocks you need to avoid.
In his report, ‘Sell These Five ‘Fatal’ Stocks Now’, Vern will show you the five biggest threats to your wealth, and how you can still prevent these mistakes now.
To get your free copy of Vern’s report, click here.