Fortescue cuts iron ore price expectations
Fortescue Metals has cut the amount it expects to receive for its iron ore shipments this year, saying slow Chinese construction and the recent Trump-inspired trade war fears are weighing on forecasts.
The mining group says it now expects full-year revenue from contracts to be about 65 per cent of the industry benchmark price for 2017/18, down from 68 per cent in the first half of the year.
At its half-year results in February, Fortescue forecast full-year revenue realisation from its contracts of 70 to 75 per cent of the benchmark Platts 62 CFR (cost and freight) index.
"The updated guidance reflects a slower-than-anticipated recovery in contractual realisations due to Chinese construction activity remaining subdued, the extension of temporary production restrictions in certain provinces in China as well as speculation regarding the potential impact of global trade tensions," Fortescue said in a statement.
Global markets are only just showing signs of stabilising after US President Donald Trump last week announced new tariffs on some Chinese imports and sent stocks falling around the world on fears of a trade war.
Iron ore prices have fallen sharply in recent weeks, from above $US78 at the start of March to $US64.33 a tonne overnight, according to Metal Bulletin data.
Fortescue, which produces lower grades of iron ore from its Western Australia mines, has also been challenged over the past year by moves in China to cut down on industrial pollution through moving to higher grades of ore and coal.
Fortescue CEO Elizabeth Gaines, who took over from long-term Fortescue head Nev Power in February, said on Tuesday the company's position as the lowest-cost supplier of ore to China "supports continued delivery of strong underlying earnings and cashflows".
After dropping to $4.47, their lowest level since mid-2016, during the day, Fortescue shares closed three cents, or 0.7 per cent, lower at $4.58.
Back to Breaking News