With iron ore demand and prices expected to rise ahead, Phillip Securities has maintained its “buy” rating for Fortress Minerals with a higher target price of 64 cents from 47 cents previously.
The brokerage has forecast the iron ore mining company’s production to increase 10% in FY2022.
It has also raised the company’s FY2022 average sales price for iron ore forecast to US$102 per dry metric tonne (DMT) from US$98 per DMT.
SEE:Phillip Securities launches live currency conversion feature on POEMS trading platform
According to Phillip Securities, Malaysia’s production of iron and steel bars and rods has increased 4.3% m-o-m in January and 16% m-o-m in February.
This could be attributed to the Malaysian government’s increased resources for the construction sector, as the economy tries to stage a recovery from the pandemic, it explains.
Iron ore prices have hit a 10-year high as iron ore supply from Brazil, the world’s largest supplier, could face uncertainty due to harsh weather.
Phillip Securities believes iron ore prices will remain above US$110 per dry metric tonne (DMT).
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Iron ore prices are currently trading at about US$170 per DMT.
“Outlook remains positive for [Fortress Minerals],” Phillip Securities analyst Vivian Ye writes in a note dated April 25.
As at 2.56 pm, Fortress Minerals was up 3.5 cents or 7.9% at 48 cents with 2.4 million shares changed hands.
