Australia's Fortescue first-quarter shipments rise 5% on sustained Chinese demand

Credit: REUTERS/© David Gray / Reuters

Australia's Fortescue Metals Group Ltd on Thursday posted a 5% rise in first-quarter iron ore shipments, buoyed by sustained demand for the steel-making ingredient from China.

Adds other performance metrics, company and CEO comments

Oct 24 (Reuters) - Australia's Fortescue Metals Group Ltd FMG.AX on Thursday posted a 5% rise in first-quarter iron ore shipments, buoyed by sustained demand for the steel-making ingredient from China.

Chinese appetite for iron ore has been supported by domestic demand for steel as Beijing leans heavily on fiscal stimulus, including massive tax cuts and increased spending on infrastructure, to blunt the impact of its protracted trade dispute with the United States on its economy.

"Demand for Fortescue's products in the quarter remained strong with Chinese steel mills focussed on raw material costs in response to current steel margins," the world's no.4 iron ore miner said.

It shipped 42.2 million tonnes in the quarter ended Sept. 30, compared with 40.2 million tonnes a year earlier and maintained its fiscal 2020 iron ore shipments forecast between 170 million and 175 million tonnes.

Chinese demand for high-quality ore is expected to accelerate in 2020 amid a pollution crackdown, which has forced steel mills to turn to higher-grade, less polluting ore to cut emissions and maximize output.

The miner reiterated plans to deliver 17 million to 20 million tonnes of its mid-grade product in 2020, about twice as much as last year.

The Perth-based miner reported cash production costs at $12.95 per wet metric tonne, below $13.19 a year earlier.

"The combination of operational performance and realised price has generated exceptional operating cashflows and lowered net debt to US$0.5 billion at 30 September 2019," Fortescue Chief Executive Elizabeth Gaines said.

(Reporting by Rushil Dutta and Shriya Ramakrishnan in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber)

((Shriya.Ramakrishnan@thomsonreuters.com;))

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