Iron Ore is in a Bull Market?

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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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. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.


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