Iron Ore is in a Bull Market?

Loading of iron ore

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).

iron ore spot price - 30-6-17

Source: Bloomberg

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.

Regards,

Härje Ronngard,

Junior Analyst, Markets & Money

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Härje Ronngard

Härje Ronngard

Harje Ronngard is a Junior Analyst at Markets and Money.

With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation.  

Härje Ronngard

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