ASX 200 iron ore miners to benefit from export boom

Iron ore is forecast to be the first Australian commodity to hit $100 billion in export earnings in a year, with ASX 200 miners like BHP Group Ltd (ASX: BHP) set to benefit.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Iron ore is forecast to be the first Australian commodity to hit $100 billion in export earnings in a year. According to a report in The Australian, Australia could see a 28% annual lift in iron ore earnings in 2019–20, reaching $101 billion. 

Among market turmoil and fears of a coronavirus-invoked global economic slowdown, the iron ore price is holding up. Still trading near US$90 a tonne, the steel-making ingredient remains in demand. High prices plus a boost in supply to 877 million tonnes could combine to set the new commodity export record, according to The Australian article.

ASX 200 miners BHP Group Ltd (ASX: BHP), and Fortescue Metals Group Limited (ASX: FMG) are among those set to benefit from the boom. Longer term, it is predicted that exports could come close to the 1 billion tonne level by 2024–25, with China as Australia's biggest commodity buyer. 

Now that it appears coronavirus has peaked in China, factories are restarting and demand for the resource is expected to rebound. As reported by The Australian, Australia's Department of Industry, Science, Energy, and Resources assumes the vast majority of Chinese workplaces will be fully operational by the end of June 2020. 

The article reports that iron ore stocks at ports in China are running at around 120 million tonnes, down from record highs of over 160 million tonnes two years ago. BHP and Fortescue are reportedly shipping strong volumes. 

Australia is also set to overtake China as the world's biggest gold producer in 2021 as high prices boost production, with gold exports forecast to soar. As interest rates fall ever lower, the opportunity cost of holding gold is lowered, increasing its attractiveness to investors.

The price of the precious metal has been extremely volatile in recent days, veering between $2,430 an ounce and $2,560 an ounce. Nonetheless, the price has increased markedly since January, when it was trading it around $2,175 an ounce. The price increase should fatten the margins of ASX gold miners including Newcrest Mining Limited (ASX: NCM), Northern Star Resources Ltd (ASX: NST), and St Barbara Ltd (ASX: SBM). 

The gold miners are some of the few ASX shares that have largely escaped the current market rout, with Newcrest up 1.62% yesterday, Northern Star Resources up 7.82%, and St Barbara up 8.95%. The gold price could well outperform in the near term if the impacts of coronavirus continue to amplify. 

Foolish takeaway

Despite current turmoil on the ASX, certain commodities are holding up. Iron ore and gold prices remain buoyant, providing a degree of comfort in otherwise turbulent times. 

Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Man jumps for joy in front of a background of a rising stocks graphic.
Broker Notes

These ASX 200 shares could rise 20% to 50%

Looking for big returns? Brokers think these shares could do the job.

Read more »

asx share price represented by cartoon letters spelling the word FOMO
Share Market News

What did Macquarie's "FOMO Meter" reveal about the stock market in May?

Is the market getting frothy or is there still room to climb?

Read more »

Market up or down
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough end to the week...

Read more »

Man in an office celebrates at he crosses a finish line before his colleagues.
Share Gainers

4 ASX 200 shares racing ahead of the benchmark this week

ASX investors sent these four stocks soaring 12% to 18% this week. But why?

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Dateline, DroneShield, Ora Banda, and Pilbara Minerals shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why BHP, Coronado Global, EBR Systems, and Whitehaven Coal shares are pushing higher today

These shares are ending the week on a positive note. Let's find out why.

Read more »

man thinking about whether to invest in bitcoin
Broker Notes

Why Macquarie expects this ASX 200 dividend stock to keep outperforming

Macquarie has tipped this ASX 200 dividend stock to outperform. Let’s find out why.

Read more »