Global aggregate demand appears strong, according to Twiggy.
The post Fortescue’s Twiggy adamant there’s ‘not a snowflake’s chance in hell’ of recession appeared first on The Motley Fool Australia. –
The Fortescue Metals Group Ltd (ASX: FMG) share price is tracking higher in early trade on Tuesday, now up 2.94% at $17.50 apiece.
But, longer-term, the Fortescue share price has tumbled to six-month lows after falling off the cliff’s edge on 10 June.
Meanwhile, the S&P/ASX 200 Energy Index (ASX: XEJ) and S&P/ASX 200 Resources Index (ASX: XJR) have each sunk 10% in the past month of trade. The S&P/ASX 200 Index (ASX: XJO) is also down 6%.
“I don’t know a better industry”
Fortescue’s chairman Andrew ‘Twiggy’ Forrest has warned investors that markets could remain “choppy and uncertain” for the coming years.
Despite this, he said there’s “not a snowflake’s chance in hell” of a global recession, adding that Fortescue is well positioned to weather any global downturn, The Australian Financial Review reports.
Fortescue is also set to benefit from its pivot into renewables, Forrest says. He noted the rapid uptick in commodity prices adds further upside to his case.
“I don’t know a better industry to be pivoting towards when fuel prices are going through the roof than an industry where you can make all your own fuel,” he told the AFR.
“We smoke $3.5 billion worth of fossil fuel into the atmosphere every year,” he added. “That is one hell of a pool of capital annually to invest into your own fuel production and green iron systems.”
Global recession unlikely
Forrest also said that amid surging input costs and a rising cost of capital, commodity prices are also spiking, feeding Fortescue the income it needs to push ahead with its plans.
Even if some countries will see a slowdown in growth, on a global scale, demand is set to remain strong, Forrest said.
Especially given there’s pent-up demand from COVID-19 that’s been increased by the conflict in Europe, according to Forrest.
Demand for iron ore “has remained strong too”, he said.
“And, if global demand for iron ore goes down, the last man standing will be the lowest cost producer. And that is Fortescue.”
In the last 12 months, the Fortescue share price has slipped 20% into the red and is down 9% this year to date.
The post Fortescue’s Twiggy adamant there’s ‘not a snowflake’s chance in hell’ of recession appeared first on The Motley Fool Australia.
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