World no. 4 iron ore miner Fortescue Metals Group <FMG.AX> reported a slight drop in second-quarter shipments but said it remains on track for another bumper year as demand and prices outstrip market expectations. The Australian miner shipped 42.2 million tonnes of the steel making raw material in the quarter to Dec. 31, down 4 percent from the previous quarter. Cash production costs fell by 7 percent to $12.54 per tonne from the previous quarter and were down 21 percent over the prior 12 months, the company said. "Fortescue has delivered another strong quarterly result, achieving improved safety performance, consistent production and sustained cost reductions across all of our operations," Chief Executive Nev Power said in a statement. Iron ore was one of the best-performing commodities in 2016, rising 81 percent on a spot basis, and currently sells for around $83 a tonne, defying forecasts by analysts for a contraction to around $55. Ore shipments have been supported by stronger-than-expected demand from China, but forecasters remain concerned that millions of tonnes of additional low-cost supply from Australia and Brazil will soon send prices into retreat. Fortescue's bigger rivals, Rio Tinto <RIO.AX> <RIO.L> and BHP Billiton <BHP.AX> <BLT.L> in Australia and Vale <VALE5.SA> in Brazil are also running their operations harder. A Reuters poll in mid-December put the average price of iron ore at $54.70 per tonne in 2017, while Barclays expects prices to tumble as low as $50 a tonne by the third quarter of 2017.[nL5N1E32WU] At Fortescue's current pace of shipments it is on track to meet or exceed the high end of its own 2016/17 guidance for 165 million to 170 million tonnes, compared with 165 million tonnes in the previous year.
Source: NASDAQ.com