Overnight iron ore fell 1.2% to US$93.80 according to data from The Australian Financial Review. Just days ago there were traders suggesting support may have been found at the US$95 level implying it was time to start buying the beaten-up sector.
And beaten up it is!
In the past six months shareholders in leading iron ore producers including Fortescue Metals Group Limited (ASX: FMG), Rio Tinto Limited (ASX: RIO) and Mount Gibson Iron Limited (ASX: MGX) have watched as their share prices have sunk 25%, 11% and 30% respectively, compared with an overall flat return from the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO).
Despite the risks, picking the bottom of the market could prove very profitable for investors given the significant broad-based sell down that has occurred amongst the miners. In fact some investors and fund managers are now calling the early stages of a bull market for resource stocks and suggesting it's time to be adding mining shares to your portfolio.
Talk of a bull market might seem a little over enthusiastic, however China's latest official HSBC Purchasing Manufacturers Index (PMI) data does show the economic powerhouse appears to have reversed a steep slowdown with the PMI jumping to a six-month high of 50.7.
For investors the key is the average price for iron ore going forward. While it's certainly possible iron ore could "hit" US$85 per tonne, what really matters is what the average price per tonne ultimately is.
