Will Iron Ore Stocks Sink Like a Stone?
NEW YORK ( Minyanville) - Concerns over demand from China have weighed on iron ore prices this month, and the world's largest producers of the raw material ended May in the red. But some say sentiment could improve in the second half of this year. It's not clear if sentiment alone, however, can prop up the sector.
Laura Brooks, senior consultant, steel raw materials at CRU Group in London says weaker Chinese underlying demand, coupled with plentiful supply and ample stocks drove the iron ore market downward in May, as falling steel prices in China weighed heavily on sentiment in the iron ore market.
Iron ore prices fell from September 2011 levels of around $180 per ton to $138 by the end of the fourth quarter, according to data from The Steel Index and Bloomberg, on weaker demand. Although prices climbed back to $148 near the end of April, May has been a different story, with prices falling to $130 earlier this month.
"Iron ore prices thus fell back after reaching modest highs for the year in April, although they are now finding some stability," Brooks says.Following substantial share price declines in 2011, year-to-date, Vale (VALE), the world's largest producer of iron ore, is down 14%, while BHP Billiton (BHP) has fallen 12.8%, and Rio Tinto (RIO) has moved 10.8% lower (to May 30).
| More from Minyanville
Three Uranium Stocks Are Up in 2012 After a Hard Fall Post-Fukushima
Why LinkedIn and Twitter Have Better Prospects than Facebook
What Else Could Go Wrong? Well, Since You Asked...
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts