Fortescue Metals is principally engaged in the operation of an integrated logistics chain starting with the mining of iron ore from the company's Cloudbreak mine site, the railing of product along the company's heavy haul rail line through to the loading of ships at the company's port facility... More
Tuesday, Apr 110:40 AM
Tuesday, Apr 110:40 AM| Comment!
- J.P. Morgan cuts its 2014 iron ore price forecast by 6% to $118/metric ton, expecting demand from China will grow more slowly to 3.5% from 5% previously, while the likes of Rio Tinto (RIO), BHP and Fortescue (FSUMF) are expected to add ~100M metric tons of supply this year, adding pressure on pricing.
- Iron ore climbed 4% in Shanghai to $116.8/ton yesterday, trimming the quarterly decline to 13%, meaning JPM basically is expecting iron ore prices to be at the current spot level this year.
- The firm still likes Brazilian iron ore producer Vale (VALE), saying it will generate positive cash flow even at the lower iron ore price.
Thursday, Feb 275:10 PM
Thursday, Feb 275:10 PM| Comment!
- Iron ore prices have tumbled to eight-month lows thanks to lower demand from Chinese steel mills, and some analysts think prices may have further to fall as steelmakers are likely to delay new purchases until they can secure cargoes at a heavy discount.
- That's a worry for global mining companies such as Rio Tinto (RIO) and Fortescue Metals (FSUMF) as they race to repay massive loans used to expand their operations; Rio says iron ore prices averaged $126/metric ton last year, which enabled it to shave $4B from its debt load in H2, but with prices falling to ~$118/ton, miners may have to slow their debt repayments.
- Underscoring the risk to its bottom line from price volatility, Rio said recently that $1.2B would have been wiped off last year's $10.2B underlying earnings had iron ore prices averaged $113/ton.
Friday, Jan 38:59 AM|Friday, Jan 38:59 AM| Comment!
Wednesday, Sep 252013, 10:59 AM
Wednesday, Sep 252013, 10:59 AM| Comment!
- Global iron ore prices are expected to trade in a range just below current levels in Q4 and beyond, miners Vale (VALE -0.7%) and Fortescue Metals (FSUMF.PK, FSUGY.OB) say, reflecting optimism Chinese demand will stay resilient.
- A top Vale executive expects more moderate demand growth but no big decline in China, the world's top iron ore consumer; he predicts prices of $120-$130/metric ton in Q4.
- Vale's expansion plans to raise annual production capacity to 480M metric tons by 2018 from 306M this year remain intact, the exec also says.
Tuesday, Sep 172013, 1:32 PM
Tuesday, Sep 172013, 1:32 PM| 1 Comment
- Don't draw any conclusions against the sale of his entire stake in JPMorgan (JPM), Jim Chanos tells Bloomberg. It was a hedge against his shorting of a number of Chinese banks (ETF: CHIX). He reminds he's still long Citigroup (C) against the Chinese shorts. "Our business is still shorting ... China has been a bright spot."
- Having said that, Chanos is finding himself enamored of a tech stock he originally purchased as a hedge: Samsung (SSNLF.PK, SSNGY.OB).
- Back in China, Chanos says the country's credit system has "gone crazy" - new debt is growing at 30-40% of GDP per year vs. about 10% nominal GDP growth (and Chanos doesn't buy the GDP numbers). Other than Chinese banks, Chanos remains short CAT along with a number of others which benefitted from the global materials boom. Two names he mentions are Australia's Fortescue (FSUMF.PK) and VALE.
- China ETFs: FXI, GXC, PGJ, YAO, FCHI, PEK, CAF, YXI, XPP, FXP, MCHI, YINN, YANG, TCHI, CHXF, KFYP.
Thursday, Apr 42013, 7:42 AMThe iron ore market will be move into surplus this year for the first time in a decade, says Morgan Stanley, and continue there until at least 2018. It's not rocket science - mine expansion projects announced during the boom years are coming online just at the time demand begins to slump. The question for miner investors: Is this already baked into their stock price? |Thursday, Apr 42013, 7:42 AM| 2 Comments
Tuesday, Feb 262013, 10:10 AMUBS sees iron ore prices slumping at least 50% by Q3 to their lowest level since 2009, as China boosts production and global supply climbs. Australia is set to deliver ~80% of total new seaborne supply this year, most of it in H2 as China has “sufficient” ore and steel production declines. But first, rates may jump as a severe cyclone nears Port Hedland, the world’s largest bulk export facility. |Tuesday, Feb 262013, 10:10 AM| Comment!
Friday, Feb 222013, 8:33 AMThe risk is high that a tropical low off Australia's northwest coast will strengthen into a cyclone by Sunday as it moves closer to the Pilbara mining belt which produces nearly half of the world's seaborne iron ore. The area also is home to two of the country's largest gas production facilities, and oil from offshore fields contribute about a third of Australia's 390K bbl/day of output. |Friday, Feb 222013, 8:33 AM| Comment!
Wednesday, Feb 132013, 5:53 PMSteel manufacturers including U.S. Steel (X) will suffer as China's appetite for iron ore slows, with high pension costs also a cause for concern, Blue Mountain hedge fund manager Andrew Feldstein says. He recommends shorting the company by being long its equity and short its credit by a ratio of one to six; he also promotes shorting Japan's JFE and Australia's Fortescue. |Wednesday, Feb 132013, 5:53 PM| Comment!
Thursday, Sep 272012, 3:48 PMSpeaking of the cure for low prices, it's estimated 40% of China's iron ore mines have suspended operations as the mineral's low price has them losing money. Good enough, but the pain is apparently not yet great enough for VALE which says it will continue forging ahead to increase ore output. Earlier: Baosteel shutters a steel plant. |Thursday, Sep 272012, 3:48 PM| 4 Comments
Wednesday, Sep 262012, 11:50 PMBaoshan Iron & Steel - China's largest steelmaker - suspends production at one of its plants, citing a "downturn in demand." "The bigger issue is ... all the mills are under pressure," says analyst Kuni Chen, warning of a vicious cycle of more production declines leading to continued slides in raw materials (iron ore) prices. |Wednesday, Sep 262012, 11:50 PM| 1 Comment
Tuesday, Sep 182012, 9:50 PMA casualty of sharp capital expenditure cutbacks by mining operations, Australian contractor Macmahon Holdings plummets 38% in Sydney amidst a warning of a sharp drop in profits and the resignation of its CEO. Meanwhile, mining boom "exhibit A" Fortescue continues a massive 2-day rally on the heels of a deal to restructure its balance sheet without a dilutive capital raise. |Tuesday, Sep 182012, 9:50 PM| Comment!
Thursday, Sep 132012, 7:07 AMAs good a proxy for the China capital spending bubble as anything can be, Australian miner Fortescue falls another 13.9% in Sydney as it asks its creditors to waive debt covenants if iron ore prices remain under pressure. Less than a month ago, management was bragging about the continuing mining boom, now the company has shelved expansion plans, and a dilutive capital raise seems likely. |Thursday, Sep 132012, 7:07 AM| Comment!
Friday, Sep 72012, 11:13 AMAustralian mining-boom poster boy Fortescue pulls out of its downward spiral, soaring 11.5% in Sydney last night amidst chatter about equity raises and/or asset sales. Commonwealth Bank suggests a deeply discounted rights offering is the best of a tough set of choices. Short a recovery in iron ore prices, UBS pegs fair value for the shares at A$2 (vs. close of $3.31). (previous) |Friday, Sep 72012, 11:13 AM| Comment!
Thursday, Sep 62012, 11:12 AMThe poster child for the China-led mining craze of the past decade, Fortescue tumbles again (-4.8%) in Sydney, now off 30% in less than a month as the reality of something less than boom times catches up. The company's recently announced capital spending cuts leaves creditors wondering how Fortescue will increase production enough to make its nut. Iron ore prices continue lower. |Thursday, Sep 62012, 11:12 AM| Comment!
Wednesday, Sep 52012, 5:03 PMKeep an eye on Fortescue in Sydney tonight. Days after their promotional management insisted all was well with the mining business, the company slashed capital spending plans and then sold a power station to raise cash, resulting in a 2-day 12.4% slide in shares. Now the company - heavily leveraged to Chinese steel demand - is apparently on the horn to convince lenders to take a piece of a $1.5B loan. |Wednesday, Sep 52012, 5:03 PM| Comment!