“Not only in China, but the ex-China activity is also picking up to pre-Covid levels,” she said. “Our view is that the market will remain robust for some time.”
In China, activity rates did not slow as much as is normal for the Lunar New Year because not as many workers returned home, she said. Many remained in the cities where they work because of coronavirus related travel restrictions.
Ongoing supply issues were also likely to keep prices underpinned given Covid-19-related disruptions at Brazil’s Vale, and the potential for further weather-related port stoppages amid the northern Australian cyclone season.
Fortescue exports from the world’s largest iron ore export hub of Port Hedland in Western Australia, where storms have already halted operations twice this season.
On Thursday, Fortescue raised its cost estimate and delayed the time frame of its key Iron Bridge Magnetite project in Western Australia, while announcing higher profits and a bumper dividend.
As part of a review of the high-grade ore project, a crucial part of Fortescue’s strategy to upgrade its products and win market share, the company earlier this week announced the departure of its chief operating officer and two other executives in its iron ore division.
The update was made in the miner’s first-half earnings report on Thursday, in which it nudged up its annual shipment forecast and reported a 66 per cent jump in profit.
“[But] the market was pleasantly surprised by the fact they got a good payout. I think the market has been concerned with the blowout in capex for Iron Bridge, the commitment to spend more on renewables and so that the dividend could be curtailed.”
Fortescue also declared a higher-than-expected interim dividend of A$1.47 (US$1.13) per share, up from A$0.76 last year, joining peers BHP Group and Rio Tinto in feeding gains from strong iron ore prices back to investors.
China’s focus on infrastructure last year drove a more than 50 per cent rise in the price of iron ore, which reached a record in December on China’s Dalian Commodity Exchange.
The payout sent a A$1.65 billion (US$1.28 billion) windfall to the company’s largest shareholder, Andrew Forrest who is Australia’s second richest person with a net worth of A$23 billion, according to Forbes.
Fortescue expects iron ore shipments to be in the range of 178-182 million tonnes for the financial year, nudging up from a prior range of 175-180 million tonnes.
Net profit after tax for the first-half was US$4.08 billion, up from US$2.45 billion a year earlier. This was in line with a consensus of US$4.09 billion from 10 analysts compiled by research firm Vuma Financial.
Fortescue said it would allocate 10 per cent of net profits after tax to fund renewable energy growth through its new unit, Fortescue Future Industries and 10 per cent to fund other resource growth opportunities.
Fonte: China Macro Economy
