The Fortescue Metals Group Limited (ASX: FMG) share price has surged 3.54% higher this morning in a strong start to the year.
Today's move continues the strong momentum we saw in 2020. Shares in the Aussie iron ore giant more than doubled last year in good news for shareholders.
So, what was the big driver for last year's move and what's the outlook for 2021?
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Why the Fortescue share price surged in 2020
The major factor pushing Fortescue's gains last year was a surging iron ore price.
Iron ore prices started 2020 at US$91.50 per tonne but finished the year at US$163.73 per tonne. Those are some impressive commodity price gains, especially in the midst of the coronavirus pandemic.
An infrastructure boom and sustained demand from China were big factors in pushing iron ore prices higher.
Strong iron ore demand has also boosted the Aussie dollar higher after underpinning Australia's exports despite increasing geopolitical tensions.
How is iron ore looking this year?
No one has a crystal ball, but various sources are expecting iron ore gains to continue in 2021.
Global ratings agency S&P Global anticipates the high iron ore prices seen in recent months to continue in the first quarter of 2021.
The government's mid-year economic and fiscal outlook (MYEFO) contained conservative forecasts for iron ore at US$55 per tonne.
CBA senior economist Belinda Allen is predicting US$82 per tonne at the end of Q3 2021. That means a strong iron ore price could continue to support the Federal Budget and the Fortescue share price.
What about the other iron ore miners?
The Fortescue share price wasn't the only mining share to experience strong gains in 2020.
Both the BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) share prices gained but nothing like the scale of Fortescue last year.
BHP shares climbed 9.0% while Rio Tinto jumped 13.4% as at year end versus a 1.5% loss for the S&P/ASX 200 Index (ASX: XJO).
