Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>This is a follow-up on our insight from 2 weeks ago, <a href="https://www.smartkarma.com/insights/iron-ore-pullback-from-102-usd-ton-to-95-usd-ton" target="_blank" data-smartkarma-citation="insights:196969" rel="noopener">Iron Ore: Pullback From 102 USD/Ton to 95 USD/Ton</a>, where we estimated a pullback on the iron ore price. </li>
<li>With mill margins retreating into negative territory and TSF numbers (although healthy) coming far below street expectations, the stage is set for iron ore to retreat to 95 USD/ton. </li>
<li>Despite iron ore prices retreating to the 95 USD/ton level, we like <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a>(Read: <a href="https://www.smartkarma.com/insights/fenix-resources-tripling-of-production-achieved-1-2x-price-ocf" target="_blank" data-smartkarma-citation="insights:197917" rel="noopener">Fenix Resources Tripling of Production Achieved, 1.2x Price/OCF</a> ).</li>
</ul>


This is a follow-up on our insight from 2 weeks ago, Iron Ore: Pullback From 102 USD/Ton to 95 USD/Ton, where we estimated a pullback on the iron ore price. 
With mill margins retreating into negative territory and TSF numbers (although healthy) coming far below street expectations, the stage is set for iron ore to retreat to 95 USD/ton. 
Despite iron ore prices retreating to the 95 USD/ton level, we like Fenix Resources (FEX AU)(Read: Fenix Resources Tripling of Production Achieved, 1.2x Price/OCF ).


Iron Ore: Reiterate Fall to 95 USD/Ton In the Near Term

<ul>
<li>Following our bullish call on iron ore, <a href="https://www.smartkarma.com/insights/iron-ore-small-bounce-to-100-usd-ton-on-oversold-levels" target="_blank" data-smartkarma-citation="insights:188600" rel="noopener">Iron Ore: Small Bounce to 100 USD/Ton On Oversold Levels</a>, we are now less excited on iron ore and see it drift lower. </li>
<li>We expected iron ore to test the lower-end of the long-term band of 95-110 USD/ton (vs current spot of 102 USD/ton).</li>
<li>While iron ore inventories/stocks at ports drift lower, mill margins have capped out and are not rising any further, leading us to call for a short-term decline in ore prices.</li>
</ul>


Following our bullish call on iron ore, Iron Ore: Small Bounce to 100 USD/Ton On Oversold Levels, we are now less excited on iron ore and see it drift lower. 
We expected iron ore to test the lower-end of the long-term band of 95-110 USD/ton (vs current spot of 102 USD/ton).
While iron ore inventories/stocks at ports drift lower, mill margins have capped out and are not rising any further, leading us to call for a short-term decline in ore prices.


Iron Ore: Pullback From 102 USD/Ton to 95 USD/Ton

<ul>
<li>We reiterate positive momentum on iron ore pricing as mill spreads pass 100 RMB/ton and positive lending data from China increases optimism. Iron ore prices are now 103 USD/ton.</li>
<li>Read: <a href="https://www.smartkarma.com/insights/iron-ore-small-bounce-from-96-to-100-usd-ton-as-china-mill-margins-turn-positive" target="_blank" data-smartkarma-citation="insights:192602" rel="noopener">Iron Ore: Small Bounce From 96 to 100 USD/Ton As China Mill Margins Turn Positive</a> and <a href="https://www.smartkarma.com/insights/iron-ore-mill-spreads-continue-to-improve-bullish-ore-to-110-usd-ton" target="_blank" data-smartkarma-citation="insights:193443" rel="noopener">Iron Ore: Mill Spreads Continue to Improve, Bullish Ore To 110 USD/Ton</a>. </li>
<li>We like <a href="https://www.smartkarma.com/entities/fenix-resources-ltd" target="_blank" data-smartkarma-citation="entities:7405:1" rel="noopener">Fenix Resources (FEX AU)</a>, which is about to commission the Beebyn-W11 mine and triple its production to 4.1 million tons (vs 1.4 million tons two quarters ago).</li>
</ul>


We reiterate positive momentum on iron ore pricing as mill spreads pass 100 RMB/ton and positive lending data from China increases optimism. Iron ore prices are now 103 USD/ton.
Read: Iron Ore: Small Bounce From 96 to 100 USD/Ton As China Mill Margins Turn Positive and Iron Ore: Mill Spreads Continue to Improve, Bullish Ore To 110 USD/Ton. 
We like Fenix Resources (FEX AU), which is about to commission the Beebyn-W11 mine and triple its production to 4.1 million tons (vs 1.4 million tons two quarters ago).


Iron Ore to 110 USD/Ton: Positive TSF Data and Mill Spread Momentum Builds

<ul>
<li>We had called iron ore <a href="https://www.smartkarma.com/insights/iron-ore-small-bounce-from-96-to-100-usd-ton-as-china-mill-margins-turn-positive" target="_blank" data-smartkarma-citation="insights:192602" rel="noopener">Iron Ore: Small Bounce From 96 to 100 USD/Ton As China Mill Margins Turn Positive</a>, and we are now at 99 USD/ton.</li>
<li>We continue to see mill margins benefit and the restock in the chain, including coking coal, which has started to move up, and forecast a gradual uptick to 110 USD/ton.</li>
<li>We express our bullishness through owning <a target="_blank">Fenix Resources (FEX AU)</a>, a small-cap iron ore miner (read: <a href="https://www.smartkarma.com/insights/fenix-resources-fex-au-q3-fy25-concall-update-czr-news" target="_blank" data-smartkarma-citation="insights:183222" rel="noopener">Fenix Resources (FEX AU): Q3 FY25 Concall Update + CZR News</a> ) </li>
</ul>


We had called iron ore Iron Ore: Small Bounce From 96 to 100 USD/Ton As China Mill Margins Turn Positive, and we are now at 99 USD/ton.
We continue to see mill margins benefit and the restock in the chain, including coking coal, which has started to move up, and forecast a gradual uptick to 110 USD/ton.
We express our bullishness through owning Fenix Resources (FEX AU), a small-cap iron ore miner (read: Fenix Resources (FEX AU): Q3 FY25 Concall Update + CZR News ) 


Iron Ore: Mill Spreads Continue to Improve, Bullish Ore To 110 USD/Ton

<ul>
<li>Following nearly a year of being in the negative, China's steel mill margins have finally turned positive, primarily driven by a decline in coking coal prices.</li>
<li>Iron ore prices have bounced 3% WoW, to 96 USD/ton, due to short-lived positive sentiment. We reiterate a short-term bounce to the 100 USD/ton level.  </li>
<li>In the medium term, we anticipate iron ore prices declining to $85/ton by early next year, when Rio's 120 million-ton Simandou project commences.</li>
</ul>


Following nearly a year of being in the negative, China's steel mill margins have finally turned positive, primarily driven by a decline in coking coal prices.
Iron ore prices have bounced 3% WoW, to 96 USD/ton, due to short-lived positive sentiment. We reiterate a short-term bounce to the 100 USD/ton level.  
In the medium term, we anticipate iron ore prices declining to $85/ton by early next year, when Rio's 120 million-ton Simandou project commences.


Iron Ore: Small Bounce From 96 to 100 USD/Ton As China Mill Margins Turn Positive

Australia

Fenix Resources Ltd operates as a resource exploration company. The Company explores for iron ore, vanadium, and manganese. Fenix Resources develops its projects in Australia.

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Fenix Resources (FEX AU)

Iron Ore: Reiterate Fall to 95 USD/Ton In the Near Term

Underwhelming TSF data, lacklustre China steel production/apparent demand numbers, and negative China mill margins will catalyze a short-term...

Sameer Taneja

Iron Ore: Pullback From 102 USD/Ton to 95 USD/Ton

Following our recent short-term bullish call on iron ore, we have now flipped the script and are calling for a reversal to 95 USD/ton (from current...

Sameer Taneja

Iron Ore to 110 USD/Ton: Positive TSF Data and Mill Spread Momentum Builds

We maintain our bullish iron ore outlook of $110/ton, up from current $103. We favor 62% Fe prices and highlight Fenix Resources (FEX AU) as a...

Sameer Taneja

Iron Ore: Mill Spreads Continue to Improve, Bullish Ore To 110 USD/Ton

Following a slight bounce in iron ore to nearly $100/ton and the build-up of momentum in China's mill margins, we believe iron ore will continue to...

Sameer Taneja

Iron Ore: Small Bounce From 96 to 100 USD/Ton As China Mill Margins Turn Positive

Chinese mill margins have turned positive, offering a slight boost to iron ore prices. Ongoing monitoring of Chinese steel production is essential...

Sameer Taneja

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