Ferrexpo PLC (LON:FXPO) has been upgraded to ‘neutral’ from ‘underweight’ by analysts at JP Morgan as the investment bank highlighted strong prices of iron ore and “record Chinese steel production”.
In a note on Tuesday, the bank also hiked its target price for the miner to 240p from 150p, saying iron ore prices had held at over US$100 per tonne “despite fears of an export surge dampening prices” and they were struggling to see anything that will release current pricing tension.
The prices have been bolstered by an acceleration in Chinese steel output, analysts said, adding that they expected the rest of the world was “likely to follow heading into 2021”.
“Positive momentum is likely to continue, based on improving global PMI, and more positive outlook comments from EU steel producers during reporting”, JP Morgan said.
One small cloud were volumes in Brazil, the bank said, which faced a “significant risk” given the “catastrophic rise” of coronavirus cases in the country.
Investors, however, took a positive outlook as shares in Ferrexpo rose 1.8% to 201.8p in lunchtime trading.