So, the COVID-19 lockdowns around the world must surely have had a devastating impact on mining, including iron ore, and the steel industry?
Well, Ingham Analytics has some surprising news for investors in BHP and Kumba.
Nothing of the sort.
Iron ore and steel demand is up, and so is pricing, whilst steel inventory is down.
The driver? China.
The decrease in oil prices too has had a positive effect. Why should this be so and how can you profit from firmer fundamentals than would be suggested by the negative headlines? In a punchy Trader, entitled “Iron ore and steel defies COVID-19 macro gloom”, there is interesting data and graphs, latest fair values on both stocks and suggested trading strategy.
On 14 May, in “Iron ore and steel defies COVID-19 macro gloom”, Ingham Analytics advised that they could see value in BHP and Kumba for the short-term trader.
Since then both stocks have strengthened with Kumba in particular powering ahead, up by 40% to R520 from R371.
This is a superb return by any standards in only one month. In the latest Searchlight note on mining and in particular iron ore mining, entitled “Kumba, qaphela!”, Ingham Analytics updates investors on the dynamics of the iron ore market and what is driving share prices.
The word qaphela gives a clue to their thinking on Kumba.
Do you stay?
Do you go?
Do you invest more?