Fortescue (ASX:FMG) sheds off almost 7% in May; here’s why

3 min read | May 31, 2022 03:04 PM AEST | By Ritwika

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Fortescue (ASX:FMG) sheds off almost 7% in May; here’s why — Image source: © Transversospinales | Megapixl.com

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Highlights

Fortescue’s share price movement was highly influenced by the sliding prices of iron ore in May 2022.

Fortescue’s March quarter update is also somewhat responsible for the share price movement of Fortescue.

The shares of Fortescue Metals Group Ltd (ASX:FMG) were spotted trading 2.367% higher at AU$20.320 per share at 12:56 PM AEST on the ASX today (31 May). More than 3.1 million shares of Fortescue were traded till then on Tuesday.

There is no significant announcement made by the company today. The share price movement could be due to the performance of the S&P/ASX 200 Materials sector (ASX:XMJ) on the ASX today.

The S&P/ASX 200 Materials sector was spotted trading 0.002% higher at 17981.400 at 1:00 PM AEST on the ASX today.

The share price of Fortescue has fallen over 10% on the ASX over the past 12 months. On the other hand, Fortescue’s year-to-date share price went up by almost 2% (as of 11:06 PM AEST on the ASX today, 31 May).

How did Fortescue shares perform in May 2022?

Although the shares of Fortescue are trading in the green territory today, the company has delivered a satisfactory performance in the past one month. The share price of Fortescue has fallen almost by 7% in a month (as of 11:06 AM AEST on the ASX today, 31 May).

There could be a couple of factors responsible for the poor performance of Fortescue shares on the ASX in the past one month.

One of the most significant reasons influencing the share price movement of Fortescue could be the price of iron ore, as the company is primarily involved in the production and supply of Iron ore.

The price of iron ore slid by 7.57% in the month of May. Iron ore was spotted trading at US$133.17 per dry metric tonne at the time of writing.

Fortescue (FMG) share price

Image source: © Sergioz | Megapixl.com

As Fortescue is a low-grade iron ore producer, the prices of iron ore highly influenced the share price of the company in May. The majority of steel producers prefer high-grade iron ore that is mainly supplied by Rio Tinto and BHP.

As a result, the prices of iron ore have resulted in the company’s shares suffering in May.

Another probable cause for Fortescue’s share price fall in May could be its March quarterly updates that the company released on 28 April 2022.

Although the company reported strong operating performance and cash flow in its March quarterly results, Fortescue ended the quarter with a debt of US$2.4 billion.

Furthermore, the company reported a capital expenditure worth US$830 million in the given period.

About Fortescue:

Fortescue Metals Group Ltd belongs to the materials sector of the ASX200 index. The company is popularly known for being a global iron ore miner and is involved with the exploration, mining, development, production and selling of iron ore. Fortescue currently holds a market capitalisation of AU$61.11 billion.

Fortescue owns four iron ore mining sites in the Pilbara region. The company was founded in 2003 with its headquarters in Western Australia. Fortescue is also known for being the supplier of the lowest cost seaborne iron ore in China.

Read more: Fortescue (ASX:FMG) shares grabbed investors’ attention today, here’s why

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