Iron ore producer and explorer, Fortescue Metals Group Limited's (ASX: FMG), shares gained 25.7% in July. The rising Fortescue share price placed the company near the top of July's best gainers on the S&P/ASX 200 (INDEXASX: XJO).
And the Fortescue share price has continued its run higher in August. In the first three trading days of this month, the company's share price is up another 5.4%. That brings Fortescue's year-to-date share price gain to 69.8%. Since its 9 March low, the share price is up almost 112%.
These are the kinds of gains resource investors might normally expect from a risky, small-cap mining share reporting a big resource discovery. But with a market capitalisation of $56.4 billion, Fortescue is anything but small.
While Fortescue's share price has gained nearly 70% so far in 2020, the ASX 200 — down 0.6% yesterday — has lost more than 10%.
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What does Fortescue do?
Fortescue is an iron ore production and exploration company. With core assets located in the Western Australia's Pilbara region, Fortescue first publicly listed in 1987. It now ranks as the fourth largest iron ore producer in the world.
The company owns and operates integrated operations spanning two iron ore mine hubs; the five-berth Herb Elliott Port and Judith Street Harbour towage facility in Port Hedland and the fastest heavy haul railway in the world.
Why is Fortescue's share price soaring higher?
Fortescue's share price has benefited from the high iron ore price, currently still well above US$100, at US$105.59 per tonne.
Fortescue share holders have also benefited from the production slowdowns of one of the company's chief rivals, Brazil's Vale SA (NYSE: VALE). Vale saw a big fall in its iron ore production, as Brazil struggled to control the nation's COVID-19 outbreak.
On the other end of the globe, China — the world's biggest importer of iron ore — has been recovering from its own virus-related slowdowns. With China's demand for steel — and thus iron ore — forecast to remain strong, I expect Fortescue's share price to continue performing well.
Indeed, Fortescue shares have performed strongly into August, buoyed by the company's fourth quarter report. The report revealed it had beaten its financial year iron ore estimates, revealing the company had, "Record iron ore shipments of 47.3 million tonnes (mt) for the quarter and 178.2 mt for FY20, exceeding the top end of guidance of 177 mt and 6% higher than FY19."
