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>It is hard to get constructive on iron ore due to poor lending data in China, with August TSF down 38% YoY, negative mill margins, and expectations of increased supply.</li>
<li>We believe, though, that we are now bumping up against the higher end of the cost curve as iron ore prices have drifted down to 90-91 USD/ton. </li>
<li>While we see a small bounce in prices, we find it hard to be positive on equities, as elevated diesel and shipping costs are causing a margin squeeze.</li>
</ul>


It is hard to get constructive on iron ore due to poor lending data in China, with August TSF down 38% YoY, negative mill margins, and expectations of increased supply.
We believe, though, that we are now bumping up against the higher end of the cost curve as iron ore prices have drifted down to 90-91 USD/ton. 
While we see a small bounce in prices, we find it hard to be positive on equities, as elevated diesel and shipping costs are causing a margin squeeze.


Iron Ore Prices: Small Bounce From 90 USD/Ton, Cost Pressures Still Negative For Equities

<ul>
<li>Diesel costs are close to the highs seen in April, when the US-Iran war began. If prices stay at these levels, the cost curve will rise by 5- 10 USD/ton.</li>
<li>Shipping costs have also increased by 30-40%, squeezing miners by a further 8-10 USD/ton over the last year on the 95-100 USD/ton base. </li>
<li>We see a scenario in which miners will continue to face downgrades as the supply-demand situation and steel mill profitability remain subdued. </li>
</ul>


Diesel costs are close to the highs seen in April, when the US-Iran war began. If prices stay at these levels, the cost curve will rise by 5- 10 USD/ton.
Shipping costs have also increased by 30-40%, squeezing miners by a further 8-10 USD/ton over the last year on the 95-100 USD/ton base. 
We see a scenario in which miners will continue to face downgrades as the supply-demand situation and steel mill profitability remain subdued. 


Iron Ore: Diesel And Shipping Cost Plague Miners

Iron Ore, Copper, Equities, Mint Finance

Umang Agrawal

Iron Ore, Copper, Equities

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Commodities

<ul>
<li>Weak mill profitability remains the key drag on iron ore, while elevated inventories and fading freight support continue to weigh on the near-term demand-supply balance.</li>
<li>The divergence in grade spreads shows 61% Fe underperforming both premium and lower-grade ore, pointing to weaker relative demand for the benchmark.</li>
<li>Options positioning remains tilted towards upside exposure, but unwinding at key strikes and a rising put-call ratio signal fading bullish conviction.</li>
</ul>


Weak mill profitability remains the key drag on iron ore, while elevated inventories and fading freight support continue to weigh on the near-term demand-supply balance.
The divergence in grade spreads shows 61% Fe underperforming both premium and lower-grade ore, pointing to weaker relative demand for the benchmark.
Options positioning remains tilted towards upside exposure, but unwinding at key strikes and a rising put-call ratio signal fading bullish conviction.


Iron Ore Monthly Derivatives Chartbook (September 2026)

<ul>
<li>We provide a comprehensive introduction to the iron ore sector, covering the drivers and a view of the commodity in the short run. </li>
<li>We look at eleven listed names in the space ( from large-cap miners to the juniors deriving a vast majority of their revenues from ore) and list our favorite miners.</li>
<li>We like <a href="https://www.smartkarma.com/entities/vale-sa" target="_blank" data-smartkarma-citation="entities:23731:1" rel="noopener">Vale (VALE US)</a> for its capital return in large caps, <a href="https://www.smartkarma.com/entities/kumba-iron-ore-ltd" target="_blank" data-smartkarma-citation="entities:25094:1" rel="noopener">Kumba Iron Ore (KIO SJ)</a>  in midcaps, and <a href="https://www.smartkarma.com/entities/mount-gibson-iron-ltd" target="_blank" data-smartkarma-citation="entities:19043:1" rel="noopener">Mount Gibson Iron (MGX AU)</a>  in junior miners<a href="https://www.smartkarma.com/entities/mount-gibson-iron-ltd" target="_blank" data-smartkarma-citation="entities:19043:1" rel="noopener">.</a> </li>
</ul>


We provide a comprehensive introduction to the iron ore sector, covering the drivers and a view of the commodity in the short run. 
We look at eleven listed names in the space ( from large-cap miners to the juniors deriving a vast majority of their revenues from ore) and list our favorite miners.
We like Vale (VALE US) for its capital return in large caps, Kumba Iron Ore (KIO SJ)  in midcaps, and Mount Gibson Iron (MGX AU)  in junior miners. 


Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector

<ul>
<li>Proforma EBITDA US$4.07bn, +19% y/y, driven by stronger realized prices and higher volumes; iron ore, copper and nickel sales up 3%, 18% and 7% y/y.</li>
<li>FY26 iron ore C1 guidance raised to US$22.5-23.5/t and all-in to US$58-62/t on BRL and Brent; copper and nickel all-in guidance cut materially.</li>
<li>At US$13.80, implies FY26e P/E 9.8x and EV/EBITDA 4.0x on US$105/t iron ore; US$1.7bn dividends approved plus a 100mn-share buyback. Risks now with iron ore 95 USD/ton. </li>
</ul>


Proforma EBITDA US$4.07bn, +19% y/y, driven by stronger realized prices and higher volumes; iron ore, copper and nickel sales up 3%, 18% and 7% y/y.
FY26 iron ore C1 guidance raised to US$22.5-23.5/t and all-in to US$58-62/t on BRL and Brent; copper and nickel all-in guidance cut materially.
At US$13.80, implies FY26e P/E 9.8x and EV/EBITDA 4.0x on US$105/t iron ore; US$1.7bn dividends approved plus a 100mn-share buyback. Risks now with iron ore 95 USD/ton. 


Vale S.A. (VALE US): Iron Ore Cost Support At 95 USD/Ton, But Margin Squeeze From Costs

Brazil

Vale S.A. is a Brazilian multinational corporation primarily engaged in metals and mining, and one of the largest logistics operators in Brazil. It is a leading global producer of iron ore and nickel, also producing copper, manganese, ferroalloys, and other base metals. The company operates integrated logistics systems including railways, maritime terminals, and ports. Headquartered in Rio de Janeiro, Brazil, the company was founded in 1942.

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Vale (VALE3 BR)

Iron Ore Prices: Small Bounce From 90 USD/Ton, Cost Pressures Still Negative For Equities

Iron ore prices have drifted lower due to weak Chinese lending data and negative mill margins. We update readers on the iron ore industry's current...

Sameer Taneja

Iron Ore: Diesel And Shipping Cost Plague Miners

We summarize how shipping and diesel costs affect iron ore miners. We also provide a brief update on iron ore imports from China and inventories.

Sameer Taneja

Iron Ore Monthly Derivatives Chartbook (September 2026)

Iron Ore's OI activity has shifted away from higher strikes, with the earlier 120-strike buildup largely unwound, signaling weaker conviction...

Mint Finance

Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector

We initiate on the iron ore space with a primer and provide our top picks among the eleven listed names we look at. Look out for detailed...

Sameer Taneja

Vale S.A. (VALE US): Iron Ore Cost Support At 95 USD/Ton, But Margin Squeeze From Costs

Vale 2Q26: EBITDA +19% y/y on volume and price gains in all three divisions, offset by a US$6/t iron ore cost guidance raise; 4.0x EV/EBITDA at...

Sameer Taneja

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