Shares of Fortescue Metals (USOTC:FSUGY) declined 1.1% to $19.03 on Thursday after reports indicated that Chinese authorities are restricting access to some of the company’s iron ore shipments.
China tightens control over lower-grade iron ore imports
According to Reuters, China Mineral Resources Group (CMRG), the state-owned company responsible for coordinating the country’s iron ore purchases, has verbally informed several steel producers that they will no longer be permitted to collect Fortescue’s Super Special Fines and Fortune Fines from port inventories from 15 July.
The affected products are both lower-grade iron ore, with the reported move representing another step in Beijing’s broader strategy to strengthen oversight of iron ore imports. Similar policies have previously affected other major Australian mining companies.
UBS maintains cautious stance
UBS reaffirmed its Neutral rating on Fortescue while making only a modest increase to its target price, raising it to A$19.70 from A$19.40.
The revised target remains only slightly above the current share price, reflecting limited expected upside. Analyst sentiment also remains mixed, with recommendations split between hold and sell as investors continue to monitor Fortescue’s exposure to discounts on lower-grade iron ore and the possibility that Chinese buyers could further reduce purchases as CMRG expands its influence over the market.
Mining sector faces broader pressure
The wider market also weighed on sentiment.
Australia’s S&P/ASX 200 fell around 0.5% as investors reduced exposure to banking and mining stocks. Fellow mining groups BHP and Rio Tinto also traded lower, highlighting broader concerns across the sector linked to China’s efforts to tighten control over iron ore supply.
Meanwhile, iron ore prices remained close to the important $99-$100 per tonne range, with market forecasts pointing to average prices nearer $94 per tonne by 2026, increasing pressure on profit margins across the industry.