Any investor who ignored the bearish calls on the iron ore sector would have doubled their money this year just by betting on the shares of the world’s fourth-biggest exporter, Fortescue Metal Group Ltd.
The gains have been driven by an unexpected price rebound amid rising steel exports and government stimulus in China. The Bloomberg Intelligence Index of 27 producers has surged 56 percent this year, beating a 3 percent gain in the MSCI World Index, while ore futures in Singapore have posted a 42 percent jump.
“Irrespective of where the market goes we are continuing to make strong margins,” Fortescue’s Chief Executive Officer Nev Power said in an interview last month with Bloomberg TV. The company, which has jumped 139 percent this year, will report this month that its full-year profit margin rose to 42 percent, according to UBS Group AG.
Three of the world’s four largest producers are scheduled to report results in August, after Brazil’s Vale SA last month posted second-quarter earnings that beat analysts’ estimates. The No. 1 shipper has gained 46 percent this year.
The largest U.S. producer, Cliffs Natural Resources Inc., is the biggest gainer in Bloomberg Intelligence’s index and has advanced almost four-fold as it swung to profit in the second quarter.
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