October 16, 2008 / 9:21 PM / 11 years ago

Fortescue forced to revise freight contracts-report

SYDNEY, Oct 17 (Reuters) - Australian miner Fortescue Metals Ltd (FMG.AX) is renegotiating iron ore delivery contracts with Chinese customers following sharp falls in steel and shipping freight prices, the Sydney Morning Herald reported on Friday.

The paper said Fortescue had contracted to pass on freight costs to just over half of its customers but industry sources said some of those customers were now asking Fortescue to wear some of the contracted freight prices.

“Fortescue said last night it was ‘juggling’ shipping schedules and renegotiating freight contracts to assist some buyers,” the Herald said.

Fortescue Executive Director Russell Scrimshaw told the paper that customers were not getting a discount from the benchmark price for iron ore.

“We’ll continue to work with our customers on the shipping price, which is entirely different to the contract price,” he said.

The paper said Fortescue had locked in many of its freight contracts at $24.50 per tonne, but prices have since fallen as low as $9.

Local industry sources said Aosen Steel could pay no more than $11, as it struggles amid falling steel prices, while Delong Steel was asking for $9.

Fortescue’s shares have lost well over half their value since mid-September as the global credit crisis led to worries a worldwide economic slowdown would eat into demand for raw materials. (Reporting by James Thornhill, editing by Wayne Cole)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below