Fortescue Iron Ore Discount Hits Record Levels in China
Fortescue Metals Group has further discounted its high-grade iron ore in China for February to 33%, a new record.
Analysts have chalked the increasingly large discounts made by Fortescue as an approach designed to maintain market share during current times of weak demand in China, due to new tough pollution control measures. Fortescue Metals Group has attributed the dip in price realisation to market conditions stemming from Chinese government intervention. "We have maintained our full year price realisation guidance at 70 to 75 per cent in line with expectations that the market will rebalance as the interventions come to an end – a view supported by market commentary out of China," Fortescue Chief Executive Nev Power Power said in response to a question about the discounting.
However, despite current slumps, outlook for future demand for the steel market in April remains positive, with Chinese steel mills expected to stockpile the commodity, along with increased demand sure to occur right after the Chinese New Year holidays.
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