JP Morgan restarts Anglo American at 'overweight', upgrades BHP

They were still expecting a greater than 10% drop in the iron ore price in 2021 to $75 per tonne if Vale shipped 35-75 more metric tonnes than in 2019 and if Chinese property investment slowed.

On top of that, inventories of steel in the Asian giant were now at record highs, analyst Dominic O'Kane said in a research note sent to clients.

Nevertheless, while it would be "premature" to "aggressively buy the dip" given the fluid and high risk situation around the China COVID-19 coronavirus, valuations across the sector were now supportive, he added.

Furthermore, "decisive" central bank actions were laying "positive foundations" for commodity prices in the back half of 2020.

As a result of all of the above, and following a period of restriction, the analyst reinstated his 'overweight' recommendation for Anglo American with a target price of £27.50.

Prior to the restriction, O'Kane had a target of £25.5.

Trading at a spot three times EV/EBITDA, the analyst said Anglo's shares were "cheap" versus peers'.

The analyst also upgraded his recommendation for BHP Billiton to 'neutral' (target price: £18.0) after it de-rated to five times' EV/EBITDA.

For Glencore meanwhile, the analyst said: "Our Glencore UW (£1.90/sh PT) is moving into focus as a depressed $34bn mkt cap leaves Industrial valued at just $17bn vs our $30bn Industrial NPV – a base metal rally would unlock substantial operational & financial leverage."