Here’s why the Fortescue share price is 8% higher so far in June

Fortescue shares are enjoying strong returns this month.

| More on:
mining worker making excited fists and looking excited

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Fortescue shares are up 8% in June 
  • The company has benefited from the recent uptick in iron ore prices 
  • China's ending of COVID-19 restrictions could further boost the price of the steel-making ingredient 

The Fortescue Metals Group Limited (ASX: FMG) share price has continued its strong form lately.

At market close on Wednesday, the iron ore mining outfit’s shares finished trading at $21.63, up 2.22%.

This means that Fortescue shares have surged 7.56% higher for the month of June.

In comparison, S&P/ASX 200 Index (ASX: XJO) is 1.25% in the red so far in June. This follows the Reserve Bank of Australia’s rate hike yesterday, which dragged down the benchmark index.

Let’s take a closer look at what’s driving the miner’s shares upwards.

Iron ore prices touch one-month high

Investors are bidding up the Fortescue share price after iron ore prices reached a one-month high.

Currently, the steel-making ingredient is fetching at US$146.50 per tonne, an improvement of 9.7% for the month of June.

An easing of COVID-19 restrictions in China as well as more potential support from government is driving the price.

In addition, it appears that the market is optimistic that demand could elevate as Chinese workers return to their jobs.

According to Bloomberg, iron ore inventories at major ports dropped to an eight-month low.

With demand outpacing supply, iron ore prices could rally even further.

Recently, India raised export duties for iron ore to 50% which increases the cost for steel mills. This is likely to impact supply on the international market as it becomes more expensive to send iron ore products overseas.

Fortescue share price snapshot

Over the past 12 months, the Fortescue share price has struggled to consistently remain near the $20 mark.

The company’s shares are down 3.5% for the period.

When looking at the year to date, Fortescue shares are up 12% despite a volatile start to 2022.

Based on today’s price, Fortescue presides a market capitalisation of approximately $66.07 billion.

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

More on Resources Shares

A wide-smiling businessman in suit and tie rips open his shirt to reveal a green t-shirt underneath
Resources Shares

‘Self-interested billionaires’: Fortescue share price climbed today despite union war of words

Fortescue’s hydrogen plans received some negative attention today.

Read more »

A woman lies back and relaxes in her boat with a big smile on her face as it floats on the rising tide.
Resources Shares

Why is the Lake Resources share price rebounding 5% on Monday?

Why have Lake Resources shares shot up 5% today?

Read more »

a man in a high visibility vest and hard hat holds a thumbs up at a mine site with heavy equipment in the background.
Resources Shares

3 ASX mining shares soaring between 6% and 20% on new finds

We take a look at what these three ASX mining shares discovered.

Read more »

Three coal miners smiling while underground
Resources Shares

Why India can’t get enough of Aussie coking coal and which ASX shares have exposure

Some ASX coal mining shares could benefit from India’s strong demand for coal.

Read more »

a man in high visibility vest and hard hat at the wheel of heavy mining machinery looks backwards out of the cabin window.
Resources Shares

How did the Fortescue share price respond last earnings season?

Here's what happened to the Fortescue share price when the company dropped its first-half results.

Read more »

A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.
Resources Shares

Here’s why I dig the Rio Tinto share price right now

There’s a good reason to go hunting for shares of this ASX miner right now.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Resources Shares

Is the Santos share price a buy following the energy giant’s latest acquisition?

Santos has slipped, should investors seize the opportunity?

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Resources Shares

Looking to buy BHP shares? Here’s what to watch when the mining giant reports this week

What kinds of things should investors be looking at in the Big Australian's upcoming result?

Read more »