Better days for Iron Ore Exporters.
The recent surge in demand for iron ore, a key raw material used in steel making process, has led to a rally in a few mining stocks during the Past one month. Sesa Goa, Prakash trading Consultants and many more big iron ore exporters India, are such companies whose stock price rose more than one-third in the past one month. In comparison, the Sen sex has gained only 7.5% during the same period. This phenomenal rise in the stock price of Sesa Goa has not been without changes in fundamentals.
Over the past few months, the demand from China for iron ore has increased significantly. This has resulted in a rise in price of iron ore fines, data from Bloomberg shows. This spike in export prices of iron ore augur well for a company like Sesa Goa, Prakash trading Consultants which exported more than 90% of its iron ore past fiscal.
Further, China accounted for more than 84% of its total sales volume past year. The company also sold the bulk of its products through spot market rates for iron ore. What all these mean is that the company’s topline and hence bottom line are closely linked to any price movements in Chinese ports.
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