Own Fortescue (ASX:FMG) shares? Here's how the share price performed in 2021

A year in review for the Fortescue share price.

| More on:
Female worker sitting desk with head in hand and looking fed up

Image source: Getty Images

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

The Fortescue Metals Group Limited (ASX: FMG) share price failed to power ahead in 2021.

In the 12-month period, the mining outfit's shares moved considerably lower, down 18%. In comparison, the S&P/ASX 200 Index (ASX: XJO) has gained roughly 13.5% over the same period.

At Friday's closing bell, Fortescue shares finished 3.14% higher to $20.37 apiece. A sharp recovery from when its shares were trading around the $14 mark in early November.

What happened with the Fortescue share price?

The volatility in the Fortescue share price in 2021 was largely driven by a slowdown in Chinese demand for iron ore. It was no secret that the Asian superpower applied political pressure to its steel producers in curbing reliance on Australian iron ore.

Chinese lawmakers introduced new rules, limiting the importation of iron ore in 2021 to no more than 2020 levels. This led to supply issues as China threatened to impose harsh penalties for steel mills who exceed production limits.

As a result, the price of iron ore more than halved during the course of last year. From reaching its lofty highs of US$200 in May, the steelmaking ingredient's price shrunk to around the US$100 mark in the following months.

Fast-forward to today, the current iron ore price has rebounded to US$125 per tonne, an ascent of 25% since December. This is partly the reason why Fortescue shares have rallied to August 2021 prices.

In addition, the company's subsidiary, Fortescue Future Industries will team up with energy behemothAGL Energy Limited (ASX: AGL).

Both companies entered into a Memorandum of Understanding (MOU) to develop a hydrogen hub for the Hunter Valley coal plants. Namely, this relates to the Liddell and Bayswater coal-fired power stations, which AGL plans to transform the site.

The Liddell coal-fired power station is scheduled to close down in 2023, with Bayswater going offline in 2025.

Fortescue boss, Andrew "Twiggy" Forrest will be involved with the development, which will consist of a 12-month feasibility study. This news which arrived early last month excited investors, sending Fortescue shares 13% higher in the following two weeks.

Is this a buying opportunity?

Last month, a couple of brokers rated the company's shares with varying price points.

Australian leading investment firm, Morgans raised its 12-month price target by 30% to $16.90 for Fortescue shares. Based on the current share price, this implies a downside of around 17% for investors.

However, JPMorgan analysts had a different tone, downgrading its outlook on the company's share price to "neutral" from "overweight". The broker also slashed its rating by 9.1% to $20 apiece. Currently, it appears that investors and JPMorgan are on the same page on where they believe Fortescue should be valued.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Miner looking at a tablet.
Broker Notes

Why Macquarie expects this ASX 200 copper stock to surge 36% in a year

Macquarie forecasts some hefty gains ahead for the ASX 200 copper miner. But why?

Read more »

A young African mine worker is standing with a smile in front of a large haul dump truck wearing his personal protective wear.
Resources Shares

Following its FY25 result, Macquarie tips more than 40% upside for this ASX All Ords mining stock

Let’s dig into why this is such an exciting stock.

Read more »

Miner looking at a tablet.
Resources Shares

Macquarie forecasts 30% upside for this ASX All Ords mining stock

If a broker is right, investors have a lot to gain with this stock.

Read more »

Miner looking at a tablet.
Resources Shares

Should I buy Pilbara Minerals or Mineral Resources shares? Here's Macquarie's take

Mineral Resources and Pilbara Minerals shares are both down more than 60% in a year, but Macquarie forecasts a big…

Read more »

Miner looking at a tablet.
Resources Shares

Does Macquarie rate Fortescue shares a buy, hold or sell?

Down 42% in a year, does Macquarie think Fortescue shares are now a good buy?

Read more »

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.
Resources Shares

Rock solid: How have mining and metals shares fared in 2025?

Who is leading so far?

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price slides despite significant reserves growth

An 89% resources upgrade hasn’t boosted Mineral Resources shares today.

Read more »

Copal miner standing in front of coal.
Resources Shares

How much upside does Macquarie tip for New Hope shares?

A softer-than-expected quarter has impacted the broker's view.

Read more »