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Analysts’ Winners and Losers among Iron Ore Miners

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Iron ore prices

Despite the majority of market participants believing the contrary, iron ore prices have rallied in 2016. The stimulus provided by the Chinese government helped the construction sector, which stimulated the demand for steel and iron ore. Apart from slight cutbacks in long-term production, the supply scenario hasn’t changed much. Vale’s (VALE) 90 million ton-per-year project, S11D, is still on track to come online in 2017. Australia’s Roy Hill has already started shipping ore. Most analysts are still bearish (SPXS) on the medium-to-long-term outlook for iron ore prices.

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Performance of iron ore miners

With stronger iron ore prices YTD (year-to-date), iron ore miners have recuperated from some of their losses. Cliffs Natural Resources (CLF) has outperformed its peers, with a YTD rise of 240% as of October 12, 2016.

Fortescue Metals Group (FSUGY) and Vale have risen 164% and 83%, respectively. Rio Tinto (RIO) and BHP Billiton (BHP) (BBL) have risen 16% and 29%, respectively.

In this series

In this series, we’ll look at Wall Street analysts’ recommendations and ratings for iron ore miners. It’s important to note that analysts’ estimates usually lag behind price movements, and we see upgrades after stocks have risen. As for downgrades, they’re apparent after a company sees lower prices.

That being said, changes in analysts’ estimates are key drivers of short-term price movements. You should keep track of changes in analysts’ estimates because they offer insight into what the market expects from a given company. In the next part of this series, we’ll look at iron ore price estimates.

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