Over the course of what has been a crazy and volatile year (to say the least), ASX iron ore miner shares have been a pillar of stability. It's a rather unusual situation for ASX resources shares like BHP Group Ltd (ASX: BHP) to find themselves in. Conventionally, companies in the ASX resources sector are renowned for their volatility and tendency to rise and fall on the back of the prices their chosen commodities command at any given point.
But in the face of the coronavirus pandemic, our biggest mining companies have, in hindsight, been some of the best shares to hold in a portfolio. Take BHP. BHP shares started the year at $38.95 and are currently trading at $37.78 (at the time of writing). That's not bad for a year when the S&P/ASX 200 Index (ASX: XJO) is still down around 10% year to date.
It's an even better story for Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG). Rio shares are 2.5% into positive territory for the year on current prices, but it's Fortescue that no one seems to have informed of the current state of the global economy. Fortescue shares are up a staggering 47% year to date. Just this morning, its shares also reached another new, all-time high of $16.10.
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Why are ASX iron ore miners hitting the roof?
Much like a certain noble house in a certain formerly-popular TV show, it's the iron price that counts here. Iron ore prices have had a remarkable year so far. They did fall to around US$80 per tonne in mid-March. But a supply squeeze in the large Brazilian mining industry has resulted in the iron ore price exploding in more recent months. At the time of writing, one tonne of iron ore is asking a market price of US$109.22.
Initially, many investors feared that the supply squeeze would resolve itself and the spike in the iron ore price would be fairly temporary. But the winds are changing on this train of thought, which is why we are seeing iron miners like Fortescue reach new highs today.
According to reporting in yesterday's Australian Financial Review (AFR), analysts from United States bank and broker, JPMorgan, have increased their 2020 forecasts for iron ore by 2% to US$93 per tonne. The broker cited robust steel output from China as the primary catalyst for the upgrade. It also upgraded its 2021 forecasts to include a US$84 per tonne pricing target (up from US$80).
Is it too late to buy Fortescue or BHP shares?
I always maintain that the best time to buy ASX resources shares is when there is a low point in the commodity pricing cycle. Right now, we are at the opposite point. Therefore, I don't think there is too much upside left to capture in the current market.
