Fortescue optimistic about Chinese steel recovery

The Iron Bridge operation. Image: Fortescue Metals Group

Fortescue Metals Group chief executive Elizabeth Gaines is confident that Chinese steel demand will support Australia’s recovery from the coronavirus pandemic.

Gaines said Chinese iron ore stocks that were built up during the March quarter were being drawn down at the ports.

Supply disruptions and China’s sustained demand for iron ore, which is reflective of the country’s commitment to urbanisation will continue to support the iron ore market, according to the chief executive.

Fitch Solutions senior commodities analyst Sabrin Chowdhury also expected the Chinese Government to implement “strong, aggressive stimulus” to prevent the domestic industry from curling under further external pressure presented by COVID-19.

With China as a key customer for iron ore products, Fortescue achieved a record shipment during the March 2020 quarter, shipping 42.3 million tonnes which is 10 per cent higher than the 38.3 million tonnes shipped in the prior corresponding period.

Fortescue also bumped up its shipments guidance for the 2020 financial year from 175 tonnes to 177 million tonnes.

The company anticipates the construction of one of its key Pilbara iron ore projects, the Eliwana project, to peak in mid-2020. The construction of the Iron Bridge magnetite project will also commence at the same period.

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