JP Morgan hikes targets for iron ore miners, says shares haven't kept up with Chinese demand

Analysts at JP Morgan hiked their target prices for several of the world's largest iron ore miners due to the confluence of strong demand and an unexpected supply shock which also saw them raise their price projections for iron ore.

China's steel output was already at record levels while in the Rest of the World it was rapidly recovering.

Against that backdrop, iron ore miner Vale had cut its 2021 guidance for output by between 40 to 80 metric tonnes, an amount that was equivalent to 2.5-5.0% of global seaborne supply, the analysts said.

Combined, they projected those two forces would push iron ore prices to $126 per tonne in 2021, which was up from a prior estimate of $105 per tonne.

Prices were now also seen higher in 2022 at $110 per tonne, against their prior projection for $91 per tonne.

They also raised their long-term price forecast, that from 2026 onwards, from $60 per tonne to $70.

Despite all of the above, shares of BHP, Rio Tinto and Anglo American had failed to keep pace, they said.

Over the previous three months their shares had risen by 20% on average yet marking to market their earnings per share were 50% higher.

Hence, JP Morgan raised its targets for BHP to 2,390p, for Rio Tinto to 7,150p, for Anglo American to 2,850p and for Glencore to 250p.