FMG 0.83% $18.29 fortescue ltd

Iron ore price, page-37701

  1. 2,357 Posts.
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    @rookstar,@zendiceman,@rurenga,@irynka,@polarbear666
    Good morning Mr Jacko, hope you are having a fine start to your day. With all this doom and gloom I looked out the window today and surprisingly the sun is starting to shine and the birds are singing. You would think with all the negativity people are bandying about that would not be the case. I know you have problems in posting up links from public domains so if you dont mind could you take the time to read one that I found on a public domain and its free to view and not behind a pay wall.

    Shane Oliver from AMP, you know the company that performed so well is now a penny stock, is telling us its risky to be hold mining stocks and maybe we all should consider buying in a couple of months when a bottom is in.

    I know its tough being a investor in these troubled times, who's advice should we place more value on. Fundies that actually hold stock and are responsible with their clients life savings or the viewpoints of anonymous posters on HC. If you have being having difficulties in posting up links of content thats free in the public domain maybe google cut and paste to see if it helps. Maybe we got off on the wrong foot and we can be of assistance to you so you too can master the difficult process of doing a cut and paste as well. I know its a hard learning curve but it would greatly assist giving your IO outlook prognosis some factual substance to your viewpoints. It would be great if you could show us the articles you have been reading that you used to base you viewpoints on. I hope you dont mind us discussing others viewpoints who may differ from your own outlook.

    On the other hand we have Ausbil’s Paul Xiradis who's without taking advice from HC posters has somehow managed to return over 83% net profit on their global resource fund last year is going long on FMG and its ilk and here is a excerpt from the article below as to the reasons why they are doing so.




    "Ausbil’s Paul Xiradis says the firm has gone long iron ore. James Brickwood

    But with the iron ore price still well above the cost of production, some fund managers are viewing the market as an opportunity to swoop on the major players at a discounted price on the assumption they are oversold.

    “It’s not unusual for markets to overshoot when there’s this sort of momentum in trading,” Mr Xiradis said.

    “What we are seeing in China is that while demand has softened, supply has been cut back at a greater rate and we’re also seeing steel product inventory fall, so there will have to be catch up.”

    Ausbil’s global resources fund, which reported a net return of 83.3 per cent in the year to August 31, recently shifted its exposure from a short position in iron ore to now being long. The fund has positions in both Fortescue and Rio Tinto.

    The move was based on the belief that iron ore’s fall has overshot and a rebound will occur before the end of this year.

    “What we’ve seen is a buyer’s strike which has allowed iron ore to enter freefall,” said James Stewart, who is co-portfolio manager of Ausbil’s global resources fund.

    “Steel production is falling but so is end-product steel inventory, meaning China can’t keep drawing down inventory without increasing output, so that rebuilding of production has to occur at some point.”



    Hope this article has provided you with a alternate viewpoint and although you may of outperformed this fund manager returns it would be of interest for you to take the time to read it and give us your valued thoughts.


    Regards Smuglex.


    Panic selling sets in as iron ore collapsesAlex GluyasMarkets ReporterSep 17, 2021 – 3.21pmThe collapse in iron ore prices and sinking valuations of the blue-chip miners over the last few weeks has left investors scrambling to protect further losses as analysts predict the worst may not yet be over for the bulk commodity.

    A spike in short positions in the iron ore majors, broker downgrades and panic selling tells the tale of the commodity’s swift fall from grace. It plunged another 18 per cent to $US107.21 a tonne this week and now sits 55 per cent below the record high of $US237.57 a tonne reached just four months ago.

    The major miners extended their recent losses on Friday as the iron ore price fell below $US110 a tonne. Krystle WrightIt means investors are at crossroads in terms of trying to catch a falling knife by picking a bottom of the iron ore price, or rotating out of heavily exposed iron ore stocks.

    “It’s risky holding those big mining names when the iron ore price is in freefall, especially given the uncertainty of when it will end,” said head of investment strategy at AMP Capital, Shane Oliver.“People are panic selling stocks with high iron ore exposure, but I suspect in the next couple of months we’ll see a bottom building and it makes sense to buy into that.

    The predicament follows an earnings season that saw Fortescue, BHP and Rio Tinto declare a combined $17 billion in dividends to Australian shareholders after a year of bumper profits.Since the beginning of last month, however, all three have seen their share price fall more than 25 per cent, led by Fortescue which is down 37 per cent after diving 11.5 per cent to $15.27 on Friday.

    Although markets had been anticipating a slowdown in demand for Australia’s top export, the sheer force of its correction and the subsequent damage to the blue-chip miners has caught many fund managers off guard.

    “There’s no doubt what’s been driving the sell-off in those big three names has been the fall off in iron ore prices,” said Paul Xiradis, the chief investment officer of $16.1 billion fund manager Ausbil.“Iron ore prices have pulled back savagely quickly. There was always consensus iron ore prices would fade lower, but the swiftness of this fall has been quite surprising.”On Friday, investment bank UBS downgraded heavily exposed Fortescue to a “sell” recommendation for the first time in 18 months, while cutting its price target from $18 to $15. It comes three months after the broker put a “sell” rating on Rio Tinto.UBS analysts admitted that iron ore fundamentals were deteriorating faster than expected because of the sharp slowdown in property activity in China amid the country’s crackdown on steel production. Steel mills in some of the largest steel-producing provinces across China have launched output cuts in recent weeks as the world’s second-largest economy tries to reduce emissions and improve air quality.

    UBS said it expected the iron ore market to swing into surplus in the second half of this year and for the spot price to fall below $US100 a tonne in the next few months. The broker also cut its forecast for average prices next year from $US101 a tonne to $US89 a tonne.The move by UBS reflected a cautious sentiment developing across markets regarding heavily exposed iron ore stocks, as some fund managers cycle them out to be replaced by more diversified players.

    “Often we see commodities all move together, but at the moment, iron ore seems to be the exception which is making it a lot harder for companies that solely rely on it,” Dr Oliver said.“It makes sense to take positions in miners that have a more diversified exposure that will benefit from higher prices elsewhere including coal, gas and copper.”SG Hiscock’s Hamish Tadgell Arsineh HouspianThis was the rationale implemented by SG Hiscock’s Australian equities fund which ditched its position in Rio Tinto last month and switched to BHP.The boutique fund’s manager said its preference for BHP was because of the miner’s diversified exposure which had better leverage to soft commodities production through potash, and future-facing commodities through its nickel business.“While iron ore has done extremely well and is still very well positioned from a global perspective where supply-side constraints still exist, we see demand coming off a bit, and we’re putting our money to work in areas we see better opportunities,” said Hamish Tadgell, who runs SG Hiscock’s SGH20 fund.

    Iron ore’s plight will also mean Australia’s national income will take a hit. Combined with lockdown support payments, the collapse in prices could see the country’s budget deficit blow out to $150 billion this year, according to AMP Capital.An imminent recovery?

    Ausbil’s Paul Xiradis says the firm has gone long iron ore. James BrickwoodBut with the iron ore price still well above the cost of production, some fund managers are viewing the market as an opportunity to swoop on the major players at a discounted price on the assumption they are oversold.“It’s not unusual for markets to overshoot when there’s this sort of momentum in trading,” Mr Xiradis said.“What we are seeing in China is that while demand has softened, supply has been cut back at a greater rate and we’re also seeing steel product inventory fall, so there will have to be catch up.”Ausbil’s global resources fund, which reported a net return of 83.3 per cent in the year to August 31, recently shifted its exposure from a short position in iron ore to now being long. The fund has positions in both Fortescue and Rio Tinto.The move was based on the belief that iron ore’s fall has overshot and a rebound will occur before the end of this year.“What we’ve seen is a buyer’s strike which has allowed iron ore to enter freefall,” said James Stewart, who is co-portfolio manager of Ausbil’s global resources fund.“Steel production is falling but so is end-product steel inventory, meaning China can’t keep drawing down inventory without increasing output, so that rebuilding of production has to occur at some point.”
    Last edited by SmugLex: 19/09/21
 
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