Fortescue iron ore shipments fall on weather problems, sees rebound

Tue Apr 12, 2011 4:11am GMT

* New mine, dry season to boost Fortescue's iron ore output
* Sees June quarter output at 12 million tonnes
* Sees 55-million-tonnes-per-year run rate by June 30
* Says global supply-demand balance favours strong prices

SYDNEY, April 12 (Reuters) - Fortescue Metals , Australia's no. 3 iron ore producer, expects to raise output to 12 million tonnes in the current quarter after heavy rains slashed March quarter shipments by 16 percent to 8.37 million tonnes.

The additional tonnage would come as the dry season in Australia's Pilbara iron belt sets in and a second iron ore mining project, named Christmas Creek nears completion, Fortescue said on Tuesday.

The Jan-March tally was at the low end of guidance given by Fortescue on March 25, when it warned heavy rains in the Pilbara continued to impact its operations. December quarter shipments were 9.93 million tonnes.

Fortescue also said it sold its iron ore for an average price of $162 a tonne CFR during the quarter versus $150 a tonne in the previous quarter and reiterated its plans to run at an annualised production rate of 55 million tonnes by June 30.

Analysts forecast Rio Tinto and BHP Billiton Ltd lost about 5 percent of their iron ore production during the quarter due to disruptions caused by wet weather.

Rio Tinto will report quarterly production figures on Wednesday and BHP on April 20.

Fortescue Chief Financial Officer Stephen Pearce dismissed mounting concerns that iron ore prices could recoil in the third quarter as restocking of raw materials by Chinese steelmakers -- Fortescue's main customers -- winds down, as some analysts expect.

"There is not a lot of new supply coming on stream at this point in time, so it is hard to see too many supply and demand factors that will change the balance," Pearce told a media conference.

"I think it (iron ore price) is likely to remain reasonably strong... Definitely over the next one to two years," he said.

Fortescue's shipments were affected by the closure of the company's port operations on two occasions as cyclones cut across the Pilbara coastline, Pearce said.

Iron ore contract prices had been tipped to rise by 20 percent to an all-time high of $179.2 per tonne in the second quarter, including freight, based on Platts 62 percent price index which is widely used by global miners in setting rates.

Strong demand from top steel producer and iron ore consumer China and tight supplies had pushed up spot iron ore prices IODBZ00-PLT .IO62-CNI=SI to record highs nearing $200 a tonne in mid-February. (Reporting by James Regan, sourced Thomson Reuters)