The Fortescue Metals Group Limited (ASX: FMG) share price is climbing almost 4% today amid a significant increase in the price of iron ore.
At the time of writing, Fortescue shares are swapping hands for $18.045 apiece, a gain of 3.71%.
Fortescue is one of the world's largest iron ore miners alongside BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). Their share prices are up 1.08% and 1.71% respectively at the time of writing.
What happened to the iron ore price?
Fortescue generates its profit by mining and selling iron ore. An increase in the iron ore price can be a boost to Fortescue's net profit after tax (NPAT).
In overnight markets, the spot iron ore price increased by 7.3% to US$145.45 per tonne. In dollar terms, it was an increase of US$9.90 per tonne.
The iron ore price has continued to be volatile amid the Russian invasion of Ukraine and China locking down certain areas of the country to try to control the spread of COVID-19.
Which way is the iron ore price expected to go next?
Commodity prices are challenging to predict. But some analysts have a go.
China is a significant buyer of a lot of Australia's iron, so a slowdown of purchasing can have a sizeable impact on the iron ore price.
The broker Citi recently said the iron ore price could drop to US$70 per tonne in the long-term, though this was an upgrade from the expectation of US$60 per tonne.
In the next couple of years, Citi thinks the iron ore price may reduce to US$80 per tonne. But Citi admitted it's possible it could be higher than that.
Other brokers, such as UBS, also have estimated the iron ore price will drop in the coming years.
Is the Fortescue share price an opportunity?
A lot of brokers believe the Fortescue share price is overvalued. Citi, UBS, and Morgan Stanley all think the business is a 'sell'.
Morgan Stanley has a particularly negative outlook for the Fortescue share price, with a price target of $13. That implies a possible decline of close to 30% over the next year.
Citi has a price target of $16 on the business, suggesting a drop of around 11%.
Brokers think Fortescue looks expensive compared to peers such as BHP and Rio Tinto. The discount applied to Fortescue's lower grade iron ore has increased compared to the middle of 2021.
Some analysts, such as Credit Suisse, also want more information and disclosure about Fortescue Future Industries (FFI).
FFI continues to make progress
Fortescue wants FFI to become one of the world leaders of green hydrogen production with a global portfolio of projects. FFI's goal is to produce 15 million tonnes of green hydrogen per year by 2030 for the global market.
It has hired some high-profile individuals to drive the business forward.
The latest appointment is the Reserve Bank of Australia Deputy Governor Dr Guy Debelle who will become FFI's chief financial officer (CFO).
Fortescue said Dr Debelle will help facilitate the green energy goals, while also delivering value for shareholders and economic benefits for the communities where FFI operates.
In terms of decarbonisation, one of the latest developments from Fortescue is the partnership with Airbus to create a plane by 2035 that runs on green hydrogen.
Fortescue share price snapshot
The Fortescue share price is swimming in a sea of red over all recent timelines.
It is down 11.5% over the past year, 6% this year to date, almost 15% over the past month, and 4% over the past week.
