Iron Ore Now Officially in a Bull Market

It’s official, iron ore has entered a bull market.

The NYMEX traded 62% Fe, CFR China index is now trading at $72.22. Since July 5 it has gone up a total of 20.4%.

A technical bull market is defined as a 20% gain.

What is behind the rising price of iron ore?

A major driving factor behind the rising price of iron ore is the announcement of major infrastructure spending in China.

China has more than quadrupled the value of fixed asset investment projects approved between July and September.

45 projects worth a total of 437.4 billion yuan ($88.9 billion) have been approved.

Many of these projects will require large amounts of steel — hence the rise in iron ore prices.

China’s growth has been slowing recently and the idea is to prop up the economy with Keynesian-style policies.

Indeed, China’s economy expanded last quarter at its slowest pace since the 2008 GFC.

Learn how to take advantage of China’s infrastructure boom with our free report on these 10 ASX-listed mining stocks.

The ASX stocks that stand to benefit from rising iron ore prices

All the usual suspects in the Australian iron ore game could stand to benefit from rising iron ore prices as it expands their margins.

These include BHP Billiton Ltd [ASX:BHP], Rio Tinto Ltd [ASX:RIO], South32 Ltd [ASX:S32] and Fortescue Metals Group Ltd [ASX:FMG].

However, looking further afield there are some potential options you may not have thought of.

These include Mount Gibson Iron Ltd [ASX:MGX] and Atlas Iron Ltd [ASX:AGO].

Both of these stocks have market capitalisations in the range of 600–400 million and as you can see below, Atlas Iron Ltd has had a particularly strong year:

Atlas Iron Limited Share Price 2017-2018

 

Food for thought.

Regards,

Ryan Clarkson-Ledward,
For Markets & Money

PS:  We have a great free report for you on 10 ASX-listed mining stocks that could be poised to take advantage of the Chinese infrastructure boom. It’s available here.


Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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