In Commodity News 23/04/2015
The benchmark iron ore price for immediate delivery to the port of Tianjin in China rose nearly 0.3% overnight to US$50.80 per tonne, nearly 10% above the 10-year low of US$46.70 posted earlier this month.
The rise represented the third increase in as many days and has seen some analysts question whether we’ve seen the low point for the year.
Foolish Investing
For the record, the Foolish position on iron ore companies has been made many times over the last few years. Even as far back as in early 2012, analyst Mike King noted that the long-term future of Arrium Ltd (ASX: ARI) would not be underpinned by its expansion into iron ore.
Indeed, just yesterday Arrium advised shareholders that it lost nearly $9 on each tonne of ore shipped from Australia in the most recent quarter, certainly not a good sign. Similarly, while still profitable at current levels, Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Limited (ASX: RIO) shareholders have seen profit per tonne plunge as the iron ore price more than halved from a peak of nearly US$160.
Can the winning streak continue?
Really it’s anyone’s guess as to where the iron ore price will end up towards the end of 2015. No one predicted the precipitous fall of the oil price in late 2014 and through 2015, nor its positive impact on the trading of airlines like Qantas Airways Limited (ASX: QAN).
