Fortescue lowers iron ore price guidance
Fortescue Metals Group is on track to the meet its annual iron ore shipments forecast but has downgraded its guidance on the price it expects to realise.
SYDNEY - [AAP] Fortescue Metals Group (ASX: FMG) is on track to the meet its annual iron ore shipments forecast but has downgraded its guidance on the price it expects to realise.
The world's fourth-largest iron ore exporter shipped 44 million tonnes of iron ore in the three months to September 30, marginally higher than 43.8 million tonnes a year earlier, and down 2 per cent from the June quarter.
The company's cash costs of $US12.15 per wet metric tonne were slightly lower than in the previous quarter, and down 10 per cent from a year earlier.
"Investing in the long-term sustainability of our core iron ore business, maintaining production, further strengthening the balance sheet and generating shareholder returns remain our key priorities," chief executive Nev Power said.
Fortescue maintained its full-year production guidance of 170 million tonnes, and cash costs are forecast to decline to between $US11 and $US12 per wmt, but it downgraded its expected price realisation.
Fortescue now expects its average realised price in 2017/18 to be between 70 and 75 per cent of the benchmark Platts 62 CFR index, down from its previous forecast of 75 to 80 per cent of the average benchmark price.
The company realised an average price of 71 per cent of the Platts 62 CFR index during the September quarter, which itself averaged US$70.90 per dry metric tonne (dmt).
Discounts between the top-grade iron ore and Fortescue's lower grades have widened in recent months, as Chinese steel mills look to reduce their cost base by using higher-grade iron ore.
The miner said it had a cash balance of $US2.3 billion at the end of September, while gross debt was down to $US4.4 billion, from around $US6 billion a year earlier.
Fortescue shares were down 13.5 cents, or 2.7 per cent, at $4.915 at 1145 AEDT.
© [2017] Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.
This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.
