Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1707
    +0.0013 (+0.12%)
     
  • GBP/USD

    1.2644
    +0.0022 (+0.17%)
     
  • Bitcoin GBP

    55,719.50
    -350.29 (-0.62%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.40
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

UBS slashes iron ore forecasts, downgrades Ferrexpo to 'sell'

LONDON (ShareCast) - UBS (NYSEArca: FBGX - news) has lowered its stance on miner Ferrexpo (LSE: FXPO.L - news) from 'neutral' to 'sell', saying it now expects iron ore to suffer a "super down cycle". The bank has lowered its iron ore price forecast by 20-30% to $48-55 a tonne at 62% Fe for 2015-2019.

It has also slashed its long-term estimate (beyond 2020) by 27% to $55, which it said is the price needed to balance seaborne supply and demand, "given ongoing cost deflation, producer FX tailwinds, loss tolerance and closure costs".

As a result, UBS has cut its profit forecasts for Ferrexpo and said that the company is at risk of becoming cash flow negative by 2016.

There is also risk of liquidity "getting tight" over the next 12 months ahead of the repayment of a remaining $285m loan in April 2016.

The bank has cut its target price for the shares from 50p to 40p, pulling the stock down 2.4% to 65.38p by 10:53 on Monday.