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Fundies still divided on miners despite iron ore soaring - Report

Mining News - Published on Tue, 19 Feb 2019

Image Source: Financial Review
Financial Review reported that investors in BHP Group and Rio Tinto are reaping the rewards of higher iron ore prices with both stocks at multiyear highs - but fund managers urge shareholders to remain cautious. Iron ore prices have spiked in the past month after issues with Brazilian miner Vale at its Brucutu mine, where a tailings dam collapsed killing more than 130 people and causing production to be halted. The collapse has disrupted supply of the equivalent of more than 4.5 per cent of the seaborne iron ore market, lifting the price above USD 90 a tonne and propelling Australia's major miners to multiyear highs.

Mr Prasad Patkar, Platypus Asset Management fund manager, said that "The market is reacting to the tragedy in Brazil. It looks like there will be an element of short-term disruption. The price went to the top of that range and has remained over that level for a lot longer than we expected. Earnings depend on commodity prices. If the prices are higher than the street is expecting, then there will be upgrades. The longer commodity prices stay higher, the more you see earnings upgrades come through."

Platypus has benefited from higher iron ore prices in recent years, buying BHP Group and Rio Tinto in 2016 when the fund manager expected iron ore prices to trade in a range of USD 40 to USD 60 a tonne.

However, Clime Investment Management portfolio manager Mr David Walker warned investors against jumping into the iron ore price cycle too late, saying it was important to recognise when the likes of BHP Group and Rio Tinto were reaching their peak.

Source :

Posted By : Rabi Wangkhem on Tue, 19 Feb 2019
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