Australia's three largest iron ore miners have all shrugged off further falls in the commodity's price overnight to be trading higher early in today's session. BHP Billiton Limited (ASX: BHP) has recovered 0.6% of its value while Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) have both appreciated 0.1% and 1.6% respectively.
The spot iron ore price fell to just US$81.90 a tonne overnight – its lowest level in more than five years and down almost 40% since the beginning of the calendar year. The heavy falls have come as a result of declining demand from China combined with greater supplies from the world's largest miners.
While each of the miners have fallen heavily in recent weeks as a result of the falling price, it is likely their shares are being bolstered today by the falling Australian dollar. Given that they are amongst Australia's largest exporters, each will benefit substantially from a weaker currency.
It is also possible that some investors believe the sell-off has been overdone and are buying the stocks now in time for a big recovery. However, I would be avoiding that strategy given that the outlook for iron ore (and the industry as a whole) remains cloudy.
