Commodities
Fortescue leaves 3.9 million tonnes of shipped iron ore unsold as CMRG talks drag on, warns operations could be affected
The miner kept its FY27 guidance but tied it to the outcome of negotiations with China's state iron ore buyer, a day after Rio Tinto reportedly settled.
HedgeWeekly News Desk ·
Fortescue shipped 46.8 million tonnes of iron ore in the September quarter, the first of its 2027 financial year, but booked sales of only 42.9 million tonnes, according to its quarterly report on Thursday. The gap of 3.9 million tonnes reflects stalled negotiations with China Mineral Resources Group, the state-backed body that buys iron ore for Chinese steelmakers. Shipments, including 2.5 million tonnes from Iron Bridge, were 6% lower than a year earlier, partly because of scheduled port maintenance.
Costs rose and pricing softened. Hematite C1 unit costs climbed to US$21.98 a wet metric tonne from US$18.17 a year earlier, above the US$20.50 to US$21.75 range Fortescue has guided for the full year. The average realised hematite price was US$79.79 a dry metric tonne, or 82% of the Platts 61% index. Cash stood at US$3.2 billion and net debt at US$2.8 billion at the end of September, after the FY26 dividend and capital spending.
Fortescue left FY27 guidance for shipments of 197 to 207 million tonnes, C1 costs and capital expenditure unchanged, but said the targets depend on the CMRG talks and that operations could be affected if no resolution is reached by the end of the calendar year. The company had flagged the sales shortfall in a preliminary update on October 8, when its shares fell as much as 3.5% in early Sydney trading.
The timing sharpens the contrast with its larger rivals. BHP reached an agreement with CMRG in April after a months-long standoff, and Reuters reported on Wednesday that CMRG had told some Chinese mills it had agreed a new supply contract with Rio Tinto, leaving Fortescue the outlier among Australia's big three producers. For investors in the miners and in iron ore exposure more broadly, the questions to watch are whether Fortescue settles before year-end, what discount or index terms it accepts, and whether unsold cargoes push it towards the production adjustments it has now put on the table.