Opportunity in the Iron Ore Rout

Australian Iron & Steel stocks tend to get hit hard regardless of their exposure to the iron ore price. However, some of them are steel producers not miners.

Only a week ago we posted on our top ten AUKUS opportunities.

One of them was an Australian steel producer.

Lower iron ore prices are not bad for steel producers facing strong demand

In between then and now, the Australian market had a good panic about weaker steel demand in China, due to slower housing starts.

The is not unreasonable, as China is the world’s largest steel market. This has driven the iron ore price back below USD $100/tonne as you can verify here.

The USD $100 mark for iron ore has acted as support these past few years.

When China sneezes Pilbara iron ore stocks catch a cold.

Fortescue Metals Group XASX: FMG was hit hard.

Fortescue Metals Group is now officially in a bear market.

Mineral Resources XASX: MIN has the drag of weaker lithium prices plus iron ore.

Mineral Resources is also in a bear market.

BHP Group XASX: BHP is more diversified, but still soft. They will report on Monday 26th August. Clearly, the iron ore outlook will be key for the market.

BHP Group is soft and flirting with a bear market.

Rio Tinto XASX: RIO reported back on 31-Jul-24 and is also soft.

Rio Tinto is also flirting with a bear market.

Among stocks over AUD $5B capitalization that only leaves XASX: BSL Bluescope Steel.

Steel producer Bluescope is holding just above bear territory.

There you have it, so far so sensible.

These are weaker times for the global steel market, and so we should be prepared for a general bear market. How bad that may get depends a lot on the outlook.

The coming BHP Group result will be widely watched.

So where is the opportunity among the wreckage?