Fortescue says strong China steel output matching demand
(Reuters) - Fortescue Metals Group , Australia's third-biggest iron ore miner and a key supplier of the raw material to China, said daily Chinese steel production was matching demand, despite a broader slowdown in economic growth.
Fortescue said it shipped 20.2 million tonnes of iron ore in the quarter ended March 31, up 3 percent from the previous quarter and 60 percent from a year ago, underscoring the company's expansion work in Australia's Pilbara iron belt.
"Market conditions in China remain strong during the March 2013 quarter supporting Fortescue's confidence in the development of the economy now and into the future," Fortescue said in its march-quarter production report.
China is the world's biggest importer of iron ore, needed to drive its massive steel industry. An unexpected slowdown in its first-quarter growth to 7.7 percent from 8 percent the previous quarter has knocked commodity markets in recent days.
"Despite steel inventories being at seasonal high levels, current daily production of steel in China of more than two million tonnes per day is matching demand," Fortescue said.
The price of iron ore retreated below $140 a tonne this week and remains 12 percent off this year's peak, but is still well above prices below $90 a tonne hit last year.
Fortescue said its direct costs averaged $43.61 per tonne in the March quarter, an improvement on $50.48 in the previous quarter.
It stuck with earlier guidance of producing between 82 million and 84 million tonnes of iron ore in fiscal 2013 and an annualised operating rate of 155 million tonnes by December 2013.