Why the Fortescue (ASX:FMG) share price has rallied 6% in the last week

Shares in the iron ore major are looking to retest previous all-time highs.

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Rising mining ASX share price represented by man in hard hat making excited fists

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2021 has been a year of sideways movement for the Fortescue Metals Group Ltd (ASX: FMG) share price.

Shares in the iron ore major hit record all-time highs of $26.40 on 8 January but tumbled to lows of $18.87 by 22 March.

In the last week, there appears to be a resurgence in confidence for iron ore miners and the broader resources sector, with the Fortescue share price staging an 8.63% rally to close at $25.18 on Tuesday.

Fortescue share price eyeing previous record highs

The Fortescue share price is less than 5% away from its January all-time record high of $26.40.

Encouragingly, Fortescue isn’t alone in its attempt to break out to new highs.

The BHP Group Ltd (ASX: BHP) share price has rallied 4.86% in the last week to $50.70. It’s also not far off its 11 May all-time high of $51.82.

Similarly, the Rio Tinto Ltd (ASX: RIO) share price is up 3.52% in the last week to $128.36. It needs another 2.84% to reach its 10 May record all-time high of $132.94.

What’s the go with iron ore prices?

Iron ore prices continue to defy bearish expectations, holding above the US$200 level.

According to Market Index, the spot iron ore price is currently sitting at US$217.33 a tonne.

Looking ahead, experts believe iron ore could pull back to pre-COVID levels in the medium-to-long term.

The Australian government’s commodity forecaster, Office of the Chief Economist (OCE), said that “prices are forecast to average around US$150 a tonne in 2021, before falling to below US$100 a tonne by the end of 2022, as Brazilian supply recovers and Chinese steel production softens”.

The last time iron ore was fetching US$100 a tonne was around early June 2020.

Back then, the Fortescue share price was trading around $14.

What’s next for the Fortescue share price?

Goldman Sachs has slapped a sell rating on Fortescue shares with a 12-month target price of $18.20.

The broker believes that Fortescue’s rally might be coming to an end and vulnerable to falling iron ore prices.

Should you invest $1,000 in Fortescue right now?

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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