The spot price of iron ore has continued its meteoric rise, fast approaching the US $120 per tonne mark after opening this morning at US $116.98.
Iron miners continue to be stand out performers on the ASX and the ever-rising price is not hurting.
The new levels we have seen this week are making new five-year highs in the price of iron (although still not close to the US $190 levels we saw in 2011). The Aussie dollar would have been hampering iron miners this week though. After trading close to the 68 US cent mark last week, our dollar has rallied somewhat and is now back buying around the US 70 cent mark. Iron is of course, traded in US dollars, so rises in our exchange rate make exporting iron less profitable.
Let's take a look at how the big iron miners have performed over the past week.
Fortescue Metals Group Ltd (ASX: FMG)
The Fortescue share price has jumped slightly week-to-date and has finished trading at $8.73 this afternoon after briefly rising over the $8.90 mark this morning. Fortescue shares are still up almost 13% in a fortnight and will likely continue to trend higher if the iron price hits the US $120 mark. However, as Fortescue is one of the 'purer' iron ore plays on the ASX, if the iron price trend reverses, expect Fortescue to get hit hard.
BHP Group Ltd (ASX: BHP)
Earlier today, BHP shares hit a new 52-week high of $41.49, which is also its highest level since June 2011 and end the day trading at $41.24. BHP shares have been holding steady above the $40 price ceiling after breaking through two weeks ago and with the iron price surge as well as a recovery in the oil price, we can see why the market is pushing BHP up and up.
Rio Tinto Ltd (ASX: RIO)
Rio shares, contrary to BHP, continue to inch away from the 52-week high made in April and end the day trading at $102.38, down week-to-date slightly under 1%. It's possible that Rio has been affected by some of the other commodity prices that it is exposed to, hence the subdued performance compared to its peers. However, Rio shares are still up 33.5% YTD and have some very happy shareholders out there.
Foolish Takeaway
If iron ore prices continue to rise, we can expect to see the big iron stocks follow dutifully. However, the dollar is the one to watch this week. If it inches back below the US 70 cent mark, this will be a boon for the miners. If it continues its current trend, it may put a dampener on any rises in the iron price.
