The price of iron ore keeps going up and people are still talking about it.
The Australian Financial Review (AFR) quoted portfolio manager William Curtayne at Milford Asset Management this morning who predicts Rio Tinto Ltd (ASX: RIO) and Fortescue Metal Group Limited (ASX: FMG) 2022 earnings to be upgraded more than 100% if the iron ore price stays at US$165 a tonne.
It’s currently trading around US$170 a tonne, up nearly 80% for the year.
Let’s take a look at what big ASX metals and mining players Rio Tinto, Fortescue and BHP Group Ltd (ASX: BHP) have got going on.
How much have these ASX miners gained so far this year?
BHP, Rio Tinto and Fortescue are all up by 10.4%, 5.9% and 7.5%, respectively year-to-date.
Each company has recently touched record highs.
The BHP share price is currently around $45, Rio Tinto is trading at about $117 a share, and the Fortescue share price is roughly $25.
Rio Tinto’s dividend is presently yielding over 5%. In total, Rio Tinto paid out an interim June dividend worth $US2.5 billion. In the 2019-2020 financial year, Fortescue paid out a dividend of $1 per share.
What if China stops ordering iron ore?
Iron ore is the number one export of Australia, and China is the number one purchaser. There has been an increasingly volatile business relationship between Australia and China for some time now.
Back in August 2020, China’s share of Australian exports reached an all-time high. The AFR then noted that this record was mainly due to iron ore, especially in the June quarter.
If China decided to completely stop ordering iron ore tomorrow, it would be a blow to Australia’s export industry.
What do analysts think about the share prices of these ASX miners?
Thirteen analysts currently rate Rio Tinto a ‘buy’, putting a 12-month price target of $83.35 on the low end and $170.58 at the top. BHP has received a similar rating from 14 analysts, with a price target range of $27.14 to $45.36.
Analysts are currently a bit more sceptical on Fortescue. Its price target spans a massive 211%, from a worse-case number of $10.34 to the best bet coming in at $32.18.