Update: Fortescue Metals Ships A Record Volume Of Iron Ore

Sep. 3.14 | About: Fortescue Metals (FSUMF)

Summary

Fortescue Metals has shipped 15 million tonnes of iron ore last month, which is more than the 13Mt needed to meet its guidance.

At a rate of 180Mtpa, the port is performing really well, and I didn’t expect the amount of shipped ore to be this high.

The investment thesis remains unchanged, as the good news is being offset by the drop in the iron ore price.

Fortescue Metals (OTCPK:FSUMF) has announced it had an excellent month of August, as the company was able to ship more than 15 million tonnes of iron ore which was loaded onto 82 ships. This was much better than the previous shipping record of 13.25 million tonnes in June and the loading of 71 vessels in July of this year.

At 15 million tonnes per year, the port is now proving it is able to operate above the expected capacity of 155-160 million tonnes of iron ore per year, and this could come in handy if for instance the ports will need to be closed for a few days for a (tropical) storm. As the company has now proven that it is able to ship more than the needed average of 13 million tonnes per year, it looks like Fortescue will be able to make up for lost time whenever adverse effects in the production or shipping process occur.

Fortescue is hitting the ground running, as it looks like it will very easily meet its expected production and shipping target of 155-160 million tonnes for this year. Unfortunately, the iron ore price isn't really cooperating as it dropped below the $90/t level. Fortunately, Fortescue Metals is a low-cost producer, so even at the current low iron ore price, the company should continue to be profitable.

Disclosure: The author is long FSUMF.

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