Fortescue continues its freefall amid weaker iron ore prices
The post Fortescue (ASX:FMG) share price craters to 10-month low as iron ore prices plunge appeared first on The Motley Fool Australia. –
The Fortescue Metals Group Limited (ASX: FMG) share price continues to crater, down 3.34% to a 10-month low of $17.95 on Tuesday.
Iron ore prices plunge to year-to-date lows
According to Fastmarkets MB, iron ore prices fell 8.8% overnight to US$132.38/t as a result of increasing government oversight on industrial production.
“Seaborne iron ore prices fell on Monday September 6, due to Chinese authorities taking a stricter stance against steelmakers on steel production curbs and the start of sintering restrictions,” Fastmarkets reported.
In addition, China’s most-traded iron ore futures on the Dalian Commodity Exchange for January delivery tumbled more than 6% on Monday to lows of 723.5 yuan per tonne, the lowest level in more than a year.
Where does the Fortescue share price go from here?
The Fortescue share price is well into negative year-to-date territory, down 27.4% in 2021. It is up just 0.67% in the past 12-months.
Today’s 10-month low is broadly in line with iron ore spot prices coming back to December 2020 levels and futures prices hitting 12-month lows.
Iron ore prices will likely continue to dictate the Fortescue share price performance.
Unfortunately, recent economic data doesn’t paint a very bullish narrative.
From a supply side perspective, Mining.com reported that ratings agency, Fitch Solutions, forecasts a jump in global iron ore production in the coming years.
“Global iron ore production growth will accelerate in the coming years, bringing an end to the stagnation that has persisted since iron ore prices hit a decade-low average of US$55.0/tonne in 2015.”
Fitch forecasts “global mine output growth to average 3.6% over 2021-2025 compared to -2.3% over the previous five years. This would lift annual production by 571mn tonnes in 2025 compared to 2020 levels, roughly the equivalent of India and Brazil’s combined 2020 output.”
Should you invest $1,000 in Fortescue right now?
Before you consider Fortescue , you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Fortescue wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
The Lynas Rare Earths (ASX:LYC) share price is soaring 4% on Tuesday
Fortescue’s big fall, job ad numbers disappoint and rates in focus. Scott Phillips on Nine’s Late News
Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.