Iron ore price, page-9167

Fortescue to benefit from Rio fire: Shaw

Fortescue Metals should benefit from firmer demand and higher prices for lower grade iron ore after Rio Tinto declared Force Majeure on some iron ore products, says Shaw & Partners analyst Peter O’Connor.

Rio Tinto said today that shipments of Robe Valley lump and fines products will be affected after an incident at Cape Lambert port last week, where fire damaged a section of the Robe River facility that separates lump and fine products.

“We expect that the shift in steel maker buying patterns – since March 2018 – when the move started back towards ‘value in use’ as opposed to ‘productivity’ – will continue against a backdrop of a low grade segment that has about 25mt less supply available - given 2018 curtailments - and now RIO’s Force Maejure on another 30mt,” says Shaw’s O’Connor. “It’s worth noting that events like this don’t last for extended periods but markets/price can be disrupted for days/weeks and maybe months.”

FMG last down 0.8pc at $4.545. Shaw has a Buy rating and $5.60 target price.