This chart provides two price levels of established historical support. FMG shares have taken a bruising since late July in tight correlation with the drop in iron ore prices. Falling prices and the Evergrande debacle in China, its biggest importing nation, have been a 1-2 punch on this otherwise healthy and growing Australian mining company.
Macro trends and commodities price forecast will be a main driver in the short and medium term.
Comfortably in the top 5 iron ore producing companies in the world, Fortescue is the largest landholder in Western Australia. A solid balance sheet and strong bottom-line growth position this stock well for the long term future.
Highlighted Metrics (source WSJ 2021-10-07): P/E = 3.14 Debt to EBITDA = 0.26 Quick Ratio = 2.00
1. Either way, Aussie investors are indirectly exposed to Evergrande through the Chinese property sector’s insatiable demand for iron ore. The price of the steel-making ingredient - Australia’s most important export - has already halved from record highs of around US$233 a tonne in May, following China’s clampdown on the property sector and pollution.
2. A downdraught in Chinese property prices would further subdue construction and reduce iron ore demand. Of course, a potential Evergrande default would be catastrophic for steel demand and shares of Aussie-listed iron ore producers.
it is possible we can see further down side:
Bowling_Knight
⋅
@AsimMirzaTrader - definitely agree we could see some further slippage to the downside, and that was a great article.
Chart makes a lot of sense and those look like reasonable price boundaries, only thing I see differently would be the rebound back from $12 happening over a longer period of time rather than a sharp bounce back up to $22.
@h3DgE4B33F - excellent point on the ex-dividend thank you for pointing that out.
h3DgE4B33F
⋅
In addition to 1 and 2, punch 3 was going ex-dividend which can add a 15-30% near term transient discount.
commsec.com.au/market-news/the-markets/2021/not-so-grand-evergrande.html?icid=ContagionFears_Awareness-cus-unt-eng-cen-prpst-20211005-1
following is a snippet from news:
1. Either way, Aussie investors are indirectly exposed to Evergrande through the Chinese property sector’s insatiable demand for iron ore. The price of the steel-making ingredient - Australia’s most important export - has already halved from record highs of around US$233 a tonne in May, following China’s clampdown on the property sector and pollution.
2. A downdraught in Chinese property prices would further subdue construction and reduce iron ore demand. Of course, a potential Evergrande default would be catastrophic for steel demand and shares of Aussie-listed iron ore producers.
it is possible we can see further down side: