falling share price, page-37

a lot of people are starting to say FMG will go belly up- of course this won't happen. They'll simply be owned by Baosteel is all. Believe it or not is up to you

Fortescue Cuts Iron-Ore Shipment Target on Closure (Update1)

By Debarati Roy and Jesse Riseborough

Nov. 11 (Bloomberg) -- Fortescue Metals Group Ltd., the third- largest iron-ore exporter in Australia, said shipments may drop to as low as 16 million metric tons this year, because of weak demand and a temporary shutdown of its port and mine processing plant.

Dispatches may reach between 16 million tons and 18 million tons this year, company secretary Rod Campbell said today at a conference in the southern Indian city of Hyderabad. The company yesterday cut its 2008 production forecast 10 percent from 22 million tons.

Stocks of iron ore in China, the world's biggest consumer, remain high and shipping schedules suggest a ``major collapse'' in Chinese demand for November and December, according to Macquarie Group Ltd. Rio Tinto Group, the world's second-largest iron ore exporter, will cut output at its mines in Western Australia by 10 percent as Chinese demand drops.

Fortescue's output may total 45 million tons to 50 million tons next year, Campbell said. Long-term contract prices in 2009 may remain unchanged or fall 5 percent to 10 percent, he said.

The company today had its price target cut 43 percent by RBC Capital Markets on concern it may be unable to meet future output targets. The target was cut to A$2.30 from A$4.00 and the rating reduced to ``underperform'' from ``sector perform.''

``We are concerned about the performance of the Cloud Break mine to date and Fortescue's ability to meet further ramp up targets over the next six months,'' the RBC report said. ``We remain very wary of the potential impact that any sales volume and/or price pushback might have on Fortescue's working capital position over the next six months.''

Fortescue fell 6.9 percent to A$2.28 at the close of trading in Sydney. The stock has slumped 80 percent this half.

To contact the reporter on this story: Debarati Roy in Mumbai at [email protected]