Fenix Resources (ASX:FEX) has made the top of the intraday gainers boards as the materials sector surges ahead of all others in the Week 39 Monday session down under, following last week’s Fed rate cut (and fresh records from Wall Street).
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Probably helping matters is SGX iron ore prices are at US$106/tn. However, the company hasn’t pushed out news on Monday, and the iron ore price hasn’t just dramatically arrived upon a three-digit figure, leaving the question open as to why, exactly, Fenix, a cheaply priced iron ore junior, has made the top gainer.
In fact, just shy of 50cps, the company is currently at an all-time high to kick off Week 39. As a result, 1Y returns are just short of a neat +100% climb, and the company’s market cap has climbed to $361M. Unsurprisingly for the materials sector, the news could in fact be due to Chinese materials policy.
That’s because over the weekend, we learned Chinese steel mills are reportedly being told by one apparatus of the Chinese gov’t to halt purchasing key BHP products due to a reported dispute over long-term contracts. “The instruction to suspend purchases specifically targets BHP’s Jimblebar blend fines, with the suspension expected to begin next week,” Finance News Network wrote on Monday.
Bloomberg reported on Friday that “Jimblebar is one of BHP’s key mines in WA, supplying ores with about 60% iron content… used in Chinese sintering blends.” And so why would that be making shares in Felix rise?
Well, the calculus is simple: Fenix is another iron ore company producing from WA.
Far larger peer MinRes also had a strong start Monday, but in early arvo trades, Fenix – with shares under a dollar – has clearly been the favoured potential winner.
FEX last traded at 49cps.
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