Iron ore rose 3.5% overnight to US$60.70 a tonne, according to Metal Bulletin, which could see the junior iron ore miners’ share prices fly in early trading.
It’s the highest level since May 3, and analysts have pointed to stronger Chinese steel prices. That is due to production curbs at some steel mills.
As the Steel index puts it, “Steel markets in China continued to firm as the authorities conduct environmental checks, resulting in output cuts at some producers. Spot rebar prices in Shanghai rose by RMB40/t, while those in Beijing gained RMB10/t. Tangshan billet prices gained RMB30/t.”
More gains could be ahead for the spot iron ore price after commodity futures rose another 3.3%.
That should be good news for Fortescue Metals Group Limited (ASX: FMG), BC Iron Limited (ASX: BCI), Mount Gibson Iron Limited (ASX: MGX), Grange Resources Limited (ASX: GRR) and Atlas Iron Limited (ASX: AGO).
Interestingly, BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) saw their share price virtually unchanged overnight on the London Stock Exchange. That is likely due to their market-leading low production costs compared to the smaller miners.
Fortescue’s share price is up 147% so far this year and closed at $4.62 yesterday. BC Iron and Mount Gibson have seen their share prices rally 52% and 66% respectively in 2016. Atlas Iron’s share price, in contrast, is down 33%, but the miner has more debt and relatively higher production costs than BC Iron and Mount Gibson.
Mount Gibson is actually trading below its cash balance – with a market cap of $327 million and cash and investments worth $400 million at the end of June.
Scott Phillips has released a FREE stock report revealing 5 stocks that he believes are WAY undervalued by the market at these current prices.
Scott thinks these 5 stocks are a 'must consider' for any savvy investor.
Don't miss out! Simply click the link below to grab your free copy and discover Scott's 5 bargain stocks now.
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Why PWR Holdings Ltd could see its share price rise from here – July 21, 2017 12:11pm
- Fortescue Metals Group Limited share price sinks on native title decision – July 20, 2017 4:23pm
- 5 overlooked finance shares to add to your watchlist – July 20, 2017 2:33pm