Australia's Fortescue Metals Group Ltd on Thursday reported a 5 percent rise in its second quarter iron ore shipments as the introduction of a new mid-grade product helped offset slowing Chinese demand.
The world's fourth-largest iron ore producer said it shipped 42.5 million tonnes (MT) of the commodity in the three months ended Dec. 31, compared with 40.5 mt a year ago. An average consensus of two analysts (Macquarie and RBC) was 43.75 million tonnes.
The miner maintained its fiscal 2019 shipment guidance at 165 million to 173 million tonnes.
Fortescue in December began shipments of its 60.1 percent West Pilbara Fines product to customers in China in a bid to improve its margins. The miner's lower-grade iron ore has fallen out of favor in recent years with Chinese mills eager to cut emissions after a pollution crackdown.
The miner said it expected to deliver 8-10 mt of the mid-grade product in fiscal 2019, and once its Eliwana mine and rail project is completed by December 2020, it expected to supply about 40 million tonnes of the product per annum.
The miner incurred slightly higher costs in mining ore during the quarter, as compared to the same period last year.
A disruption to Brazilian iron ore output caused by an accident at a Vale SA mine prompted a large jump in iron ore prices, and a corresponding surge in the stocks of iron ore miners, including Fortescue.
(By Ambar Warrick Nikhil Kurian Nainan; Editing by Lisa Shumaker and Grant McCool)