(Updates to add closing share price in fifth paragraph.)
July 11 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-biggest iron ore producer, said prices that have tumbled 28 percent this year will stabilize as higher-cost production leaves the market.
Iron ore slumped into a bear market in March as miners in Australia and Brazil expand output, spurring a global glut of the steelmaking ingredient. Banks from Goldman Sachs Group Inc. to Morgan Stanley are predicting lower prices in 2015.
Prices declined in the June quarter “as a result of volatility driven by significant new iron ore supply entering the market,” the company said. “Fortescue expects the iron ore market to rebalance in the short term as higher cost production leaves the market flattening the global cost curve and stabilizing the price.”
Total shipments were 38.7 million metric tons in the three months to June 30, from 25 million tons a year earlier, the Perth-based company said today in the statement. A $9.2 billion expansion to boost annual output to 155 million tons a year is complete, the company said.
Fortescue fell 0.2 percent to A$4.34 in Sydney trading and has declined 25 percent this year.
The producer said fiscal full-year shipments were 124.2 million tons, lower than the target of 127 million tons set in January and closer to a UBS AG forecast of 125 million.
Fortescue received an average price of $106 a dry metric ton in the 12 months to June 30, generating revenue of $11.4 billion, it said in the statement.
Capital spending in the 12 months to June 30, 2015, is forecast to total $1.3 billion, excluding its Iron Bridge joint venture, the producer said.