Why are the ASX 200 iron ore giants outperforming on Friday?

Man in orange hard hat cheers

Man in orange hard hat cheers

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) remains on course to end the week on a high. At the time of writing, the benchmark index is up 0.75% to 7,230.6 points.

A key driver of this has been gains by ASX 200 iron ore shares.

For example, here is a summary of how they are performing today:

  • The BHP Group Ltd (ASX: BHP) share price is up 2.5% to $46.72
  • The Champion Iron Ltd (ASX: CIA) share price is up 7% to $7.78
  • The Fortescue Metals Group Limited (ASX: FMG) share price is up 4% to $21.43
  • The Rio Tinto Limited (ASX: RIO) share price is up 2.5% to $115.78

What’s driving ASX 200 iron ore shares higher?

As you might have guessed, Australia’s leading iron ore shares are gaining today because of a rise in the price of the steel-making ingredient.

According to CommSec, the benchmark 62% fines iron ore price rose by US$6.86 or 5.1% overnight to US$142.20 a tonne.

This is materially higher than the cash costs per tonne of these miners, which means they are likely to be generating significant free cash flow right now. This bodes well for their earnings and ultimately their dividends.

Why is the iron ore price rising?

The catalyst for the rise in the iron ore price this week has been news that China is finally coming out of lockdowns. This has sparked hopes that demand for the metal will increase as China attempts to boost its struggling economy.

Though, it is worth noting that not everyone is positive on the metal. As we mentioned here earlier this week, the commodities team at Commonwealth Bank of Australia (ASX: CBA) is forecasting a sharp pullback in prices in the coming months.

The post Why are the ASX 200 iron ore giants outperforming on Friday? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More reading

Motley Fool contributor James Mickleboro 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/I5hevJo

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s