Iron ore miner Fortescue Ltd. reported a drop in sales, as a standoff with state-backed buyer China Mineral Resources Group Co. over long-term supply contracts and price negotiations drags on. Shipments in the three months through September fell 6% from the previous quarter, while sales were below exports, “reflecting impacts from ongoing negotiations with China Mineral Resources Group,” Fortescue said in a statement Thursday. Maintenance including port shutdowns also affected results, it said.
CMRG is seeking greater pricing power in some key metals and earlier told steel mills and traders it planned to restrict some of Fortescue’s products. China is the world’s largest iron ore importer by a wide margin, taking most cargoes from miners in Australia and Brazil. The clash with Fortescue is just the latest between major Australian miners and CMRG, which was established to consolidate China’s iron ore purchasing and pricing power.
BHP was locked in a months-long standoff with the group before reaching an agreement in April. Fortescue has said actions by the state-backed buyer were undermining the market, prompting the miner to explore alternative customers to reduce the impact of the dispute.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing