Fortescue Metals Group has met its forecasts for iron ore shipments for the June 30 2017-18 financial year, after shipments accelerated in the June quarter.
Shipments jumped 20% in the June quarter from the March quarter to hit a 4th quarter new record.
But they were only up 4% from the same quarter of 2016-17.
Fortescue said June-quarter shipments totalled 46.5 million tonnes, with the overwhelming majority of FMG’s iron ore shipments – 91% going to China.
Fortescue also pointed out to growth in non-China shipments which more than doubled during fiscal 2018 to 13.2 million tonnes. Those extra tonnes to non-Chinese markets helped push total exports to a record 169.7 million tonnes – a fraction under the 170.4 million tonnes shipped in 2016-17.
And unlike the 170 million tonne guidance given a year ago for 2017-18, Fortescue yesterday gave a range figure for 2018-19’s shipments of 165 million to 173 million tonnes – indicating some uncertainty about the outlook, especially in China.
Perhaps that’s why the shares dipped 4% to $4.38.
The company said it kept costs under control, with cash production costs of $US12.17 per wet metric tonne for the quarter, in line with the June quarter of the 2016-17.
Fortescue also pointed out that its prices were a bit higher than forecast in the closing three months of the year.
Fortescue revealed average contract prices during the quarter rose to 63% (from 62%) of the Platts benchmark price for ore with a 62% iron content delivered to northern China.
This was about $US40.95 per dry metric tonne of ore against benchmark prices of around $US65 to $US73 a tonne during the year.
Fortescue joined its big rivals, Vale of Brazil and BHp and Rio Tinto in Australia in reporting better than expected June quarter shipments.
Chief executive Elizabeth Gaines said in a statement that Fortescue had delivered an “outstanding operational performance” during the June quarter, and was in a strong position for fiscal 2019.
"It was a strong finish to fiscal 2018, with the team delivering record shipments of 46.5 million tonnes in the quarter to achieve our target of 170 million tonnes for the full year. Importantly, this was delivered while maintaining our focus on costs, which decreased by 7 per cent compared to the March quarter,” she said.
“Building on our outstanding operational performance in the quarter, Fortescue has delivered on key strategic initiatives which position us for the next phase of growth while improving safety and productivity, ensuring we remain the lowest cost producer of seaborne iron ore.”
The company said Cash on hand at June 30 was $US863 million following the repayment of the balance of the 9.75% Senior Secured Notes ($US160 million) and payment of the interim 2018 dividend ($US264 million) during the quarter. Net debt was $US$3.1 billion.
