Iron Ore Prices Stage a Comeback in Mid-June: Will It Last?



Iron ore prices make huge correction

Iron ore prices have staged a huge comeback, trading at $65 per ton on June 16. In early April, prices fell to a decade low of $47.08. This is a huge 38% correction. But keep in mind that prices are still quite low compared to 2014. Iron ore prices are down 52% since those 2014 levels.

As we’ll see later in this series, steel prices have remained weak and have, in fact, touched 12-year lows. This is one of the factors that could limit the march forward for iron ore prices. The supply side also remains strong, with some of the capacity slated to come on line later this year and in 2016.

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What we’ll cover in this series

In this series, we’ll see how recent data releases from China are impacting iron ore prices. We’ll also look at iron ore companies’ revenues, margins, and stock prices. These companies include BHP Billiton (BHP) (BLT), Rio Tinto (RIO), Vale SA (VALE), and Cliffs Natural Resources (CLF).

The iShares MSCI Global Metals & Mining Producers ETF (PICK) invests in iron ore. BHP Billiton is PICK’s top holding, making up 16.7% of the fund. The SPDR S&P Metals & Mining ETF (XME) also invests in the metals and mining space.

In this series, we’ll also look at a few indicators that relate to China’s demand for iron ore. These include China’s property sector indicators, auto sales, and credit growth. The series also includes discussions on steel production trends in the United States. This will help investors understand the direction iron ore prices could take in the future.

Most of these indicators are published monthly. Other indicators are reported weekly or quarterly. Regardless, investors should look at these indicators collectively. They give important clues about the future direction of iron ore prices.


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