Fortescue Metals Group LtdOTCQX
Does The Weak Australian Dollar Help Fortescue's Performance?
The Investment Doctor • 11 Comments
The Investment Doctor • 11 Comments
Wed, Nov. 30, 11:18 AM
- Iron ore prices fell today by the most since March, extending a retreat from a two-year high, as China’s exchanges lowered the daily trading limit and raised margin requirements in a bid to clamp down on speculation.
- Ore with 62% content delivered to Qingdao fell 6.8% to $72.08/ton after hitting $80.83 on Monday, the highest since October 2014 and culminating a 65% YTD surge.
- Despite the steps to tighten trading rules, "the basics that are driving that speculation - the search for higher yielding assets and the desire to hold U.S. dollars at a time for a weaker yuan - have not changed,” says Westpac Banking economist Justin Smirk. “As such, we would expect to see significant volatility for some time.
- Relevant tickers: BHP, RIO, VALE, OTCQX:FSUMF.
Wed, Nov. 16, 7:48 AM
- BHP Billiton (NYSE:BHP) says it will run its iron ore mines at full speed through the year-end amid surging global prices rather than suspend some Australia operations like rival Rio Tinto (NYSE:RIO).
- Rio, Australia's biggest iron ore miner, yesterday announced a two-week shutdown during Christmas at its Hope Downs 4 mine in Western Australia, although it expects the mine to meet its 2016 production target.
- Fortescue Metals (OTCQX:FSUMF) also says it will keep its operations running through Christmas.
- BHP -2.5% premarket, RIO -1.8%.
Tue, Nov. 8, 9:18 AM
- BHP Billiton (NYSE:BHP) and billionaire Gina Rinehart’s Hancock Prospecting are among commodity producers that have held talks over a potential entry into mining and exploration projects in Ecuador, the country's mining minister says.
- BHP has shown interest in a number of copper projects, including a potential partnership with state-owned miner Enami and Chile’s Codelco in their joint Llurimagua copper and molybdenum project, the minister says.
- Fortescue Metals (OTCQX:FSUMF) Chairman Andrew Forrest reportedly has traveled to the country in recent months and met with Ecuador's vice president to discuss exploration prospects.
- Newcrest Mining (OTCPK:NCMGF), Australia’s biggest gold producer, last month agreed to pay ~$22.8M for a 10% stake in SolGold, a Brisbane-based explorer with a copper and gold project in Ecuador.
Thu, Oct. 20, 9:11 AM
- Fortescue Metals (OTCQX:FSUMF) says FQ1 iron ore shipments rose 5% Y/Y to 43.8M metric tons, beating analyst estimates.
- Cash costs fell to a lower than predicted $13.55/ton in the quarter from $16.90/ton in the same period a year ago, driven by productivity and efficiency initiatives.
- Higher prices for coking coal is squeezing margins for steel mills, causing additional orders for the cheaper, lower grade iron ore such as the type Fortescue mines, CEO Nev Power says.
Tue, Oct. 4, 12:30 PM
- Australia’s top iron ore producers BHP Billiton (BHP +0.6%), Rio Tinto (RIO -0.8%) and Fortescue Metals (OTCQX:FSUMF) shipped less than expected in the past three months, jeopardizing their ability to meet full-year guidance, Macquarie analysts say.
- Data from Western Australia’s key iron ore terminals indicate exporters moved combined cargoes totaling ~209M metric tons during Q3, compared with a forecast of 216M tons by Macquarie, which cuts its forecasts for shipments in the quarter for BHP, Rio and Fortescue by a respective 2%, 3% and 6%.
- Macquarie says Rio likely will miss its FY 2016 shipments guidance of 330M tons by ~3M tons, while BHP could struggle to achieve the upper range of its Pilbara production forecast of 265M-275M tons amid a rail maintenance program and as it commissions a crusher at the Jimblebar complex.
Mon, Oct. 3, 12:58 PM
- Fortescue Metals (OTCQX:FSUMF) CEO Nev Power dismisses concerns about oversupply in the iron ore market, taking the view that a prolonged commodity crash is finally giving way to a cyclical upturn.
- "There is stability in demand in China, and most of the new large volume supply has already come on to the market," Power tells Financial Times, adding that some forecasters are overestimating the speed at which new supply would materialize.
- The CEO says long-term iron ore demand and price would be determined by Chinese economic policy and the rate of growth in emerging economies across Asia, and that “the demand side will be much more important than new supply.”
- Relevant tickers: VALE, BHP, RIO, CLF, OTCPK:GLCNF, OTCPK:GLNCY, OTCPK:AAUKF, OTCPK:AAUKY
Thu, Sep. 15, 7:59 AM
- The prospect of iron ore at below $50/metric ton is back in view following the longest losing streak in more than five months, dropping 5.8% in the past seven sessions to $55.97.
- Iron ore's September retreated has rekindled speculation that rising supply from mine ramp-ups and new projects may soon drag prices lower; for example, the Roy Hill mine in the Pilbara is expected to reach full annual capacity of 55M tons in early 2017.
- Vale (NYSE:VALE) says that while its S11D project has capacity to produce 90M tons/year, constraints mean the net gain will be 75M tons, and it will take four years to reach full output.
- BHP Billiton (NYSE:BHP) says prices likely will drop as the underperformance of supply this year is reversed over the next 12-18 months.
- Other relevant tickers include RIO, OTCQX:FSUMF and CLF.
Tue, Aug. 23, 6:28 PM
- Iron ore is one of the hot commodities of 2016, but Citigroup analysts are the latest to foresee prices cooling off soon as supply rises and steel demand weakens.
- Citi notes that iron ore has become the best YTD performer among major commodities even though its market fundamentals have provided little support to its YTD price hikes, as the market instead has followed a few rallies of Chinese steel product prices, which are expected to lose momentum in Q4.
- Citi sees iron ore averaging $51/metric ton in Q4 and just $45 in 2017 under its base case scenario, vs. $61.75/ton currently and a YTD average of $53.64, up more than 40% in 2016 after three years of losses.
- Morgan Stanley recently issued an even more bearish outlook for iron ore, predicting prices as low as $35 in H2.
- Relevant tickers include VALE, BHP, RIO, OTCQX:FSUMF, CLF.
Mon, Jul. 11, 8:49 AM
- Record iron ore shipments moved through Australia's Port Hedland terminal in June, as BHP Billiton (NYSE:BHP) and Fortescue Metals (OTCQX:FSUMF) operated near full capacity and inventories rose at Chinese ports.
- Port Hedland shipments to China rose to 34.5M metric tons in June from 31.7M metric tons in May, breaking the previous record of 33.9M in March; total iron ore shipments from the port jumped to 41.8M metric tons in June, also a record, from 39.4M in May.
- Rising production amid a drop in Chinese steel production led Australia's government on Friday to cut its iron ore price forecast, citing concerns over slowing growth in demand.
- Other relevant tickers include RIO, VALE and CLF.
Tue, Jun. 7, 12:59 PM
- Iron ore shipments from Australia’s Port Hedland, the world’s largest bulk export terminal, posted the third highest level on record last month, indicating that the global glut is set to persist.
- Exports totaled 39.4M metric tons in May from 37.7M in April and a record 39.5M tons in March; exports came in at 38M tons in May a year ago.
- Ore with 62% content in Qingdao rose 2.8% to $52.54/dry ton today but still well shy of April’s high of $70.46/ton.
- Port Hedland handles cargoes for miners including BHP Billiton (NYSE:BHP), Fortescue Metals (OTCQX:FSUMF) and new entrant Roy Hill Holdings.
Tue, May 10, 11:47 AM
- Steel and iron ore futures traded in China sink for a sixth straight day, wiping out much of their recent rally, on expectations of more cooling measures from Chinese regulators and rising stockpiles that renew concerns about a growing global glut.
- Yesterday's announcement from the Dalian exchange that it would strengthen market oversight and limit frequent short-term trading by implementing different transaction fees is believed to have triggered the selloff yesterday and today in iron ore, steel rebar and coke futures.
- Also, China’s stockpiles of iron ore hit its highest level in more than a year, to 99.85M metric tons last week.
- In Australia earlier today, investors dumped shares in big miners: BHP Billiton (BHP +2.4%) fell as much as 5.3% to a one-month low, Rio Tinto (RIO +2.3%) slid as much as 5%, while Fortescue Metals (OTCQX:FSUMF) tumbled 7.6%; shares have since rebounded in U.S. trading.
- Also, CLF +0.3%.
- Now read Iron ore prices post biggest weekly loss since 2011
Wed, Apr. 6, 10:58 AM
- Iron ore exports from Australia's Port Hedland rose to a record in March, according to the world’s biggest bulk-export terminal, which handles cargoes for miners including BHP Billiton (BHP -1.3%) and Fortescue Metals (OTCQX:FSUMF).
- Total shipments rose to 39.53M metric tons last month from 36.63M in February and 36.61M a year ago, surpassing the previous high of 39.4M set in September; exports to China rose to 32.6M metric tons vs. 29.14M in February and 31.2M in the year-ago month.
- Iron ore with 62% content in Qingdao was little changed at $54.75/dry ton yesterday after losing 2.8% last week and surging 23% in Q1, rebounding after three years of losses, as mills in China ramped up output ahead of the peak-construction season.
- Now read BHP Billiton: Goldman Sachs is right, but things are not so bad
Wed, Mar. 9, 9:47 AM
- Fortescue Metals (OTCQX:FSUMF) Chairman Andrew Forrest lends his weight to a renewed call for an inquiry into iron ore exports from Australia, arguing oversupply is hurting competition.
- His comments follow remarks from Cliffs Natural Resources (CLF -2.5%) that it too wants a government inquiry, as its biggest rivals in Australia have a strategy to crush the competition.
- Australia’s government last May rejected calls by Fortescue and an independent lawmaker to investigate the iron ore market.
- BHP Billiton (BHP +0.3%) and Rio Tinto (RIO -0.9%) have defended their strategy of expanding low-cost output and reject the idea of an inquiry, warning that it risked undermining Australia’s commitment to free trade and open markets.
- Meanwhile, ore with 62% content fell 8.8% to $58.02/metric ton today, eroding some of Monday’s record surge.
Tue, Mar. 8, 10:26 AM
- Iron ore miners fall sharply as the spectacular rally stalls and analysts pile in with mostly bearish assessments.
- Iron ore’s rally likely will prove "short-lived," Goldman Sachs said yesterday as it maintained an end-of-year target of $35/ton, while Citigroup says it is still bearish and Axiom Capital Management says the jump probably is just a blip.
- "The rally is there to be sold because the fundamentals of the market, being supply and demand, do not stack up," says Wayne Gordon at UBS Wealth Management.
- Monday’s 20% spike largely was a response to weekend comments from the Chinese government that implied more infrastructure investment, and does not change the mid-to-long-term outlook, says BHP (BHP -8.8%) Minerals Australia President of Operations Mike Henry.
- Roy Hill CEO Barry Fitzgerald says the price spike was an "aberration... the consensus, if you look at the forward estimates is down, $30s, $40s."
- Citigroup adds that the joint venture between Vale (VALE -10.7%) and Fortescue (OTCQX:FSUMF -12.4%) might have implications for iron ore price support longer term, but it sees an oversupplied market near term.
- Also: RIO -9.1%, CLF -11.3%, X -8.6%, MT -8.3%, AKS -6.9%.
Tue, Mar. 8, 8:27 AM
- Iron ore producers Vale (NYSE:VALE) and Fortescue Metals (OTCQX:FSUMF) announce a joint venture in which the Brazilian company may buy up to a 15% stake in the Australian company, a stake worth ~US$1.1B.
- Vale and Fortescue say they plans to blend selected volumes of iron ore from both companies, including up to 100M metric tons of their ores in China, producing the benchmark product preferred by local steel mills and squeezing out a little extra margin in the process.
- The alliance could lead to both lower costs and higher prices for the companies, according to analysts at Jefferies, which estimate the strategy could improve the value of Vale’s ore by an average US$2-US$4/ton, or ~US$400M annually.
- "There is some logic in mixing Vale’s ~66% ore with [Fortescue] ~58% ore, if both can achieve a better realized price for the tonnes that are blended, and if this can deliver a value-in-use for the customers then it’s conceptually a win-win-win scenario," Morgan Stanley‘s Brendan Fitzpatrick says.
Mon, Mar. 7, 8:39 AM
- Iron ore soars to its biggest one-day gain since at least 2009, as investors anticipate further monetary easing by the Chinese government to boost steel demand.
- Ore with 62% content delivered to Qingdao jumped 19% to $63.74/metric ton, the highest price since June, Bloomberg reports.
- "The iron ore and steel markets have gone berserk - they’ve departed from fundamentals and are heavily driven by sentiment,” says an analyst at China Merchants Futures Co. in Shenzhen.
- Australia's Fortescue Metals (OTCQX:FSUMF) +24% in Sydney trading, and Cliffs Natural Resources (NYSE:CLF) is +19.3% in U.S. premarket; also, VALE +8.4%, RIO +1.2%, BHP +0.8% premarket.
- Earlier: Vale leads biggest rally in metals stocks in seven years (Mar. 4)
- Earlier: Iron ore prices have rallied, but analyst warns gains likely temporary (Mar. 3)