Sentiment is weaker with the coverage of higher port stockpiles but Atlas Iron summed it up well as below. As imports become a greater proportion of total iron ore usage then you would expect port stockpiles to also be higher.
Based on seven broker consensus, FMG is trading on a 2016 P/E ratio of only 7.8 Analysts have been upgrading earnings and will probably upgrade further for 2016
I expect this to fall to 6 for 2017 if the IO price averaged US$50 per ton in 2017 (slightly below the 2016 price average). Free cash flow multiples are lower (add about US$1 billion free cash flow in addition to the NPAT).
Still, there is an unexpected undercurrent of demand from China, and less new iron ore supply than many had expected from BHP and Rio, meaning the downside to prices may be limited.
David Flanagan, the managing director of rejuvenated West Australian iron ore junior Atlas Iron, said the growth in port stockpiles was not indicative of sliding demand.
“The seaborne market has been growing and it has been displacing domestic Chinese production, so you would expect stockpiles at the port to go up,” Mr Flanagan said yesterday on the sidelines of a mining conference on the Gold Coast.
“We saw the surge in buying driving prices higher, and that was accompanied by a surge in stocks at the port to meet that increased demand,” Mr Flanagan added.
He said growing stockpiles were not necessarily indicative of sliding demand.
“While no one wants to see great big mountains of ore at the ports, if they are using more iron ore to make more steel, you are going to have bigger stockpiles,” Mr Flanagan said.
http://www.theaustralian.com.au/bus...s/news-story/2b3bef26c56c1ad883c47cd03e8d8608
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