Iron ore rally lifts Fortescue Metals – by Barry Fitzgerald (The Australian – February 22, 2016)

http://www.theaustralian.com.au/

The value of chairman Andrew Forrest’s one-third stake in Fortescue Metals has climbed back to more than $2 billion after briefly dipping to as low as $1.5bn a month ago.

While his stake is still down heavily on its $6bn value in 2011, the recent value surge reflects a rally in iron ore prices as measured by the Steel Index to a three-month high of $US47 a tonne, and expectations of good news on a number of fronts in Wednesday’s interim profit report.

Fortescue shares shot 22 per cent higher last week from $1.62 to $1.99 as iron ore prices climbed in response to restocking by Chinese steel mills after the Lunar new year.

Most analysts are unconvinced that iron ore can hold on to the higher levels. But the price recovery from the January 13 low of $US39.30 a tonne is working wonders on producer margins, improving investor sentiment to the sector at the same time.

Iron ore’s price rally came too late to impact Fortescue’s December half results, with prices for the steelmaking raw material particularly tough in November and December.

Citi analysts are nevertheless tipping an interim profit of $US235 million compared with the loss of $US14m on an underlying basis in the preceding June half last year, and a profit of $US331m in the previous corresponding period.

For the rest of this article, click here: http://www.theaustralian.com.au/business/mining-energy/iron-ore-rally-lifts-fortescue-metals/news-story/c48f375a031a14ac1ff3bd3ee86002e6

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