China demand is stable and bulk of large supply has already hit the market, says Australian miner
Sydney – Fortescue Metals Group has dismissed concerns about oversupply in the iron ore market, taking the view that a prolonged commodity crash is finally giving way to a cyclical upturn.
The Australian iron ore miner — which a year ago was struggling amid dwindling iron ore prices — is one of a host of global resource companies enjoying a surge in their share price due to a jump in commodity prices this year.
“We think there is stability in demand in China, and most of the new large volume supply has already come on to the market,” said Nev Power, Fortescue chief executive. “The commodity market is cyclical and there is no reason to expect we won’t see a continuation of that.”
Shares in Fortescue, the world’s fourth-largest iron ore producer, have tripled to A$5 this year, from a low of A$1.37 in mid-January as iron ore prices fell below US$40. Shares in BHP Billiton, Rio Tinto, Glencore and Anglo American have also rallied as the prices of most commodities have begun rising due to stronger demand from China and a tightening of supply.
“The stimulus provided by the Chinese government is part of the story,” said Mathew Hodge, analyst at Morningstar. “But we have also seen supply disruptions in the iron ore market and coking coal markets.”
For the rest of this article, click here: https://www.ft.com/content/45947c80-86e2-11e6-bcfc-debbef66f80e