Fortescue shipped 46.8 million tonnes of iron ore in the September quarter, down 6% from a year earlier, while sales lagged production amid negotiations with China Mineral Resources Group. Net debt also rose to US$2.8 billion after the final dividend and quarterly capital spending, although FY27 guidance remains unchanged.
- Q1 FY27 iron ore shipments of 46.8Mt, down 6% year on year
- Hematite realised price of US$80 per dry metric tonne
- Sales of 42.9Mt fell short of shipments amid CMRG negotiations
- Net debt increased to US$2.8 billion from US$0.9 billion
- FY27 shipment, C1 cost and capital expenditure guidance unchanged
Shipments fall as sales trail production
Fortescue Ltd (ASX:FMG) shipped 46.8 million tonnes of iron ore in the first quarter of FY27, a 6% decline from the same quarter last year. The figure included 2.5Mt from Iron Bridge, the asset that featured prominently in Fortescue's FY26 record shipments and subsequent impairment disclosures.
The more immediate issue is the gap between output and sales. Fortescue sold 42.9Mt during the quarter, 3.9Mt below shipments, with the company attributing the difference to ongoing negotiations with China Mineral Resources Group, or CMRG. The filing does not disclose the terms under discussion or indicate when they might be resolved.
Maintenance and negotiations pressure quarterly cash flow
Scheduled maintenance, including port outload shutdown activity, affected shipments. Fortescue said supply chain stocks remained healthy at quarter-end, suggesting the operational disruption was contained within the reporting period, although the preliminary update does not provide the detailed production or cost breakdown due later this month.
Net operating cash flow was also affected by higher working capital and increased product inventory. Hematite realised at US$80 per dry metric tonne, equivalent to 82% of the average Platts 61% CFR Index for the quarter.
Net debt climbs after dividend and capital spending
Cash stood at US$3.2 billion at 30 September, while net debt reached US$2.8 billion. That compares with net debt of US$0.9 billion at 30 June, with the increase occurring after Fortescue paid its US$1.0 billion FY26 final dividend and spent US$0.9 billion on capital expenditure during the quarter.
The balance-sheet movement is therefore tied to clearly identified cash uses, but the combination of lower sales, higher inventory and the unresolved CMRG negotiations gives the next cash-flow update added importance. Fortescue has not changed its FY27 shipment, C1 unit cost or capital expenditure guidance, subject to the negotiations continuing with CMRG.
Full production report due on 22 October
This is a preliminary performance update rather than the full quarterly report. Fortescue is scheduled to release its September 2026 Quarterly Production Report on 22 October, when investors should get more detail on operating costs, production volumes and the basis for maintaining FY27 guidance.
Bottom Line?
The next test is whether CMRG negotiations convert the shipment inventory into sales without forcing a change to FY27 guidance.
Questions in the middle?
- When will the CMRG negotiations be resolved, and what sales volumes will be recognised once they are?
- How much of the higher inventory and working capital outflow will reverse in the next quarter?
- Will the full production report support unchanged FY27 guidance after the maintenance disruption and lower sales?