What Led Morgan Stanley to Downgrade Rio Tinto While Upgrading Fortescue Metals?

Wed 09 Apr 25, 06:24 AM | Team Kalkine

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Highlights

Morgan Stanley has upgraded Fortescue Metals Group (ASX: FMG) to "overweight," despite a less-than-optimistic iron ore price outlook affecting Australian miners. The decision reflects the analyst's belief that any near-term weakness in the iron ore market has already been priced into Fortescue’s shares heading into the 2026 financial year. It has been pointed out that Fortescue’s cash generation remains consistent, while the ramp-up at its Iron Bridge project is expected to improve the average iron ore grades across the company’s portfolio.

While the outlook for iron ore remains uncertain, with the commodity entering a seasonally good supply quarter, the cost curve for Australian miners is steep. It is believed that any additional stimulus measures in China could help boost demand sentiment in the market, even amid low iron ore futures prices. At the time of writing, Singapore's benchmark iron ore futures had dropped 1.6%, reaching $US93.25 per tonne, a seven-month low.

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