3 stocks that benefit from rising iron ore prices
© Reuters. 3 stocks that benefit from rising iron ore prices
The high demand, especially from China, has led to an increase in iron ore prices. As a core element of steel production and with several countries around the world renewing their infrastructure, the demand for the raw material is expected to increase even further. Hence, we believe the BHP Group (NYSE :), Rio Tinto (NYSE 🙂 and Labrador (LIFZF) are in a great position to take advantage of this. Let’s think about these names. The recovery in steel demand with the rapid economic recovery has driven iron ore prices to record highs. Now that China, one of the world’s largest importers of iron ore, is back on the market after the disruptions of the COVID-19 pandemic and is experiencing a construction boom, demand for the commodity is expected to continue to grow. The solid performance of the iron ore industry last year is reflected in the returns on the iShares MSCI Global Select Metals & Mining Producers ETF (PICK) of 126.1% last year versus 46.1% for the SPDR S&P 500 Trust ETF (SPY) during this period.
High iron ore prices encourage mass production, which increases investor interest. Overall, a recovering economy, rising demand and high business confidence have resulted in solid industry growth. The global iron ore pellet market is expected to grow 3.7% CAGR from 3.7% over the next six years.
With the rise in iron ore prices expected to continue in the near future, we believe the BHP Group (BHP), Rio Tinto Plc (RIO) and Labrador Iron Ore Royalty Corporation (LIFZF) are well positioned to benefit.
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