How Trump’s Feud with China Could Hurt BHP and Rio

If you’ve been watching the price of iron ore, you’ll know mineral has been up and down. Spot prices ran up above US$94 a tonne on 21 February, only to quickly race back down below US$64.

Iron ore is now sitting around US$65 a tonne. But confidence in iron ore demand and steel production can quickly change, as we’ve seen.

The last thing iron ore miners like BHP Billiton Ltd [ASX:BHP] and Rio Tinto Ltd [ASX:RIO] need is uncertainty over demand.

But thanks to Donald Trump, sentiment for the commodity could soon hit rock bottom. As reported by the Sydney Morning Herald (emphasis mine):

President Trump ordered the Commerce Secretary to prioritise an investigation into whether steel imports into the US “threaten to impair national security”, by drawing on an obscure provision in a 1962 trade law.

The move opens up a path for the Trump administration to potentially impose harsh tariffs on steel from a broad range of countries that Australia exports the steel-making ingredient iron ore to.

This would likely affect the demand for iron ore, having a flow-on effect on both BHP and Rio.

Of course, this is just speculation for the moment. Trump’s investigation could end up going nowhere. For now, BHP and Rio seem to be safe, as investors bid up both stocks this morning.

Thanks to overnight trade, both BHP and Rio are up 1.9% and 2.5% respectively this morning. Rio got an added bump due to Citibank raising their recommendation on the miner to a ‘buy’.

What now for BHP and RIO?

Rio and BHP probably aren’t the stocks you’d hold for a short-term gain. While both impressively appreciated in 2016, they likely won’t run up more than 40% in 2017.

But there are resource stocks that could.

Resource expert Jason Stevenson has an impressive track record when it comes to resource stocks. A number of Jason’s active investments in his advisory service, Resource Speculator, are up 52.4%, 57.6% and 100%!

If these are the kinds of returns you’re looking for, you’d do well to cast your eye over Jason’s free report, ‘The Top 10 Australian Mining Stocks for 2017’.

Jason will introduce you to 10 cheap, top-quality Aussie mining stocks that look set to soar this year.

To get your free copy of Jason’s report, click here.

Regards,

Härje Ronngard,

Junior Analyst, Markets and Money


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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