what's priced in?
The iron ore price hastraded down to US$95/t spot, -9.2% 1mth; China's macro and iron ore/steelsignals remain weak (here and here), China Baowu has warned of a "severewinter" for the steel industry, and Australian iron ore stocks have soldoff.
What comes next?
We look to cost curve support to emerge, given 95thpercentile is US$101/t and 90th percentile US$88/t. Flipping cost curves tomargin curves, we observe BHP has the highest, and therefore most resilient,iron ore margins.
MIN and FMGare most operationallylevered to weak/weakening iron ore prices.
UBS View: In a weak iron ore pricescenario, we prefer $BHP Group Ltd (BHP.AU)$ (Neutral) > $Rio Tinto Ltd (RIO.AU)$ (Neutral) > $Fortescue Ltd (FMG.AU)$ (Sell) > $Mineral Resources Ltd (MIN.AU)$ (Sell).
Source:UBS
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