Since the turn of the year, the BHP share price is up 21%, the Rio Tinto share price is up 28%, and the Fortescue share price is up a whopping 92%.
The latter is the second best performer on the benchmark index behind only Afterpay Touch Group Ltd (ASX: APT), which has risen a staggering 104% in 2019.
Why are these mining shares racing higher?
Investors have been snapping up the shares of BHP, Fortescue, and Rio Tinto due to a sizeable increase in iron ore prices this year.
Following the dam disaster at Vale’s operation in Brazil and recent disruptions in Australia, there are concerns that iron ore supply might not keep up with demand.
This led to the benchmark iron ore price climbing to US$95.90 a tonne on Friday according to Bloomberg, which was its highest level since July 2014.
The good news for these miners is that some experts believe that prices could continue to climb higher from here.
Wu Wenzhang, founder and president of Shanghai Steelhome Information Technology Co., told Bloomberg that prices could increase “as mine closures in Brazil spur a market deficit in the second half of the year.”
Wu warned that if iron ore stockpiles in China slide below 100 million tonnes, it was likely to trigger “devastating” price volatility. As of April 5, port stockpiles totalled nearly 150 million tons, just ahead of the “safe minimum” of about 120 million tonnes, according to Wu.
Is it too late to invest?
If iron ore prices continue to climb higher then I suspect that BHP, Fortescue, and Rio Tinto shares will continue their ascent.
Whilst this could make all three a buy, my preference remains BHP and then Rio Tinto due to their diverse operations and strong capital positions. I expect these two miners to return the majority of their free cash flow to shareholders via buybacks and dividends in the coming years.
But if you're not keen on resources shares then check out these buy-rated blue chip shares that have been tipped as potential market beaters.
You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.
So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!
Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...
While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...
Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.
You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Scott Phillips.