Consider taking profits
Iron ore prices have come off recently but they’re still some 10% above the prices from a year ago and almost 50% above the June 2016 lows. With that in mind, the Kumba update showed production up another 17% from the first quarter of 2016. However, sales were up only 3% as last year saw the company selling stockpiles. With the rand some 7% stronger over the last year, this means revenue is likely to be flat in this first quarter, leaving any profits to come from reduced costs. While I am still bullish on the share, it may be time to take profits.
The Leeuwfontein pit at Kolomela Iron Ore Mine near Postmasburg in the Northern Cape.