The cherry on top for Fortescue investors
In another impressive quarter in a bumper year for the iron ore miner, one highlight stood out: demand for Fortescue's ore is rising, and so is its price.
Oct 29, 2020 – 1.53pmCompared to the exciting string of deals Andrew Forrest has been doing around the world during his recent impression of the Billionaire Energizer Bunny, the performance of Fortescue Metals Group looks positively prosaic – in the best possible way.
Yet again, FMG produced another cracking quarter, with production marginally above market expectations, costs just below consensus and the group’s key development projects – the Eliwana development and the Iron Bridge magnetite project – on schedule and budget.
Elizabeth Gaines says China's recovery has been remarkable. David Rowe
Given Fortescue shares are up more than 51 per cent this year – giving Forrest plenty of freedom to do some COVID-19 deals – investors are feeling satisfied right now. But they should take further heart from the prices that Fortescue is getting for its ore.
The average realised price FMG received during the September quarter was $US105.77 a tonne, or 89 per cent of the Platts benchmark for 62 per cent ore. That’s up from 87 per cent of the benchmark in the June quarter.
Further, FMG’s revenue per tonne increased by 31 per cent compared with the June quarter, while the average benchmark price increased 27 per cent over the same period.
RELATED QUOTES
AdvertisementClearly that suggests there is robust demand for Fortescue’s products, and chief executive Elizabeth Gaines says the miner has worked hard to keep quality high. But she also argues that growing faster than the benchmark comes back to the relationships FMG has with key customers in China, and its decision to diversify distribution in the country via port-side sales from regional ports.
The combination – the right products, the right relationships, diversified distribution – is what's helping FMG rise higher than the tide.
It’s highly likely that iron ore prices will experience their usual seasonal dip around December, when the Chinese steel industry drops down a gear. But the outlook for iron ore prices remains robust given the stimulus efforts that are likely to continue in China and around the world during the pandemic recovery.
Gaines says the Chinese recovery has been remarkable and there are also green shoots in other steel-producing nations such as Japan and South Korea, which were hit hard by the pandemic.
Looking further out, the tried-and-true recovery formula remains: recovery means investment, and investment generally requires steel.
James Thomson is a Chanticleer columnist based in Melbourne. He was the Companies editor and editor of BR
The cherry on top for Fortescue investorsIn another impressive...
-
- There are more pages in this discussion • 6 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Add FMG (ASX) to my watchlist
 (20min delay)
|
|||||
|
Last
$21.41 |
Change
-0.260(1.20%) |
Mkt cap ! $65.92B | |||
| Open | High | Low | Value | Volume |
| $21.52 | $21.67 | $21.30 | $150.5M | 7.000M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 93 | $21.40 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $21.41 | 12657 | 3 |
View Market Depth
| Last trade - 16.10pm 28/06/2024 (20 minute delay) ? |
| FMG (ASX) Chart |