Commodities: Iron Ore
I would like your opinion as to why FMG has crashed – was forecast to be in the mid $20s by MM now around $16
Mineral Resources isn’t a pure play Li stock but its where the company’s growth is perceived to come from; hence, it’s dancing to the same tune as PLS. It’s easy to think that MIN has simply come down to 3-month support, but the downside momentum combined with the 3-pronged negative news makes us feel it is likely to break lower.
The rising supply of iron ore from RIO’s Simandou mine in West Africa has been weighing on the bulk commodity in recent months, taking prices down ~15%, but current prices remain above consensus analysts’ estimates, providing room for begrudging upgrades if it can remain at current levels. However, for us to become materially more bullish on iron ore, we’d want to see Beijing move from supporting financial conditions to directly stimulating steel-intensive demand, i.e. not the focus of this weekend’s stimulus.
We covered BHP’s strong FY26 result here; since then, despite the advance in copper and iron ore, the “Big Australia” is basically unchanged, considering it’s $1.38c fully franked dividend last week. BHP has evolved into more of a copper company, as opposed to iron ore, over the last few years, but despite both commodities advancing, the recent rally has been significant, pushing our prevailing weights in both the Growth & Income Portfolio’s well above target.
We covered iron ore miner FMG’s solid FY26 result here, with our view at the time still relevant today: “FMG remains a leveraged exposure to iron ore and China. We think the stock looks fair rather than compelling here.” China and iron ore have improved the backdrop this week for FMG, but not in a meaningful way for us to consider the stock for our growth portfolio.
RIO has spent much of 2026 in BHP’s shadow, gaining 21% compared with BHP’s impressive 39%, although both are clearly enjoying stellar years. Much like BHP around the $65 area, RIO is starting to look a little tired around $180, and some near-term consolidation, or a pullback, wouldn’t surprise us. Unlike its larger peer, RIO is still primarily an iron ore miner; hence, further stimulus from Beijing would be a positive lever, but hoping on such moves is akin to buying a stock hoping for a takeover.
Hi MM,
Dear Esteemed Team,
The US–Canada trade dispute escalated sharply over the weekend after negotiations collapsed just before Saturday’s deadline, triggering 50% US tariffs on around US$20bn of Canadian goods. Canada retaliated with tariffs on US$20bn of products from September 8, despite the two sides reportedly being close to a deal covering steel, aluminium and autos before a last-minute dispute over heavy vehicles derailed talks.
