Fortescue Metals Group’s March quarter shipments were flat over last year at 42mt and in-line with UBS’s forecast. While shipment and cost guidance remains unchanged but Fortescue Metals has lifted its capex forecast to circa US$200m.
UBS notes the miner is benefiting from high iron ore prices and expects prices to fall to circa $100/t by 2021 end and to about $75/t by 2023-end as Brazilian supply recovers, China demand softens and inventories build.
In the broker’s view, strong China pig iron production and high global steel prices currently underpin iron ore.
Neutral with a target of $18.
Target price is $18.00.Current Price is $22.44. Difference: ($4.44) – (brackets indicate current price is over target). If FMG meets the UBS target it will return approximately -25% (excluding dividends, fees and charges – negative figures indicate an expected loss).