“China’s massive infrastructure investments could boost iron ore demand”

In an interview on Tuesday, Otranto highlighted China’s $167 billion hydropower project on the Yarlung Tsangpo River and the world’s largest and fastest-growing high-speed rail network. The hydropower facility, which requires digging tunnels through high mountains, is set to be one of the world’s most expensive infrastructure projects. Meanwhile, China’s investment in expanding its high-speed rail network could amount to hundreds of billions of dollars over the next decade.

“That is a lot of steel,” Otranto said, adding that the projects produce tangible results within just a few months after being announced, and the execution is impressive.

This statement came as Fortescue reported a 41% drop in annual net profit. Lower iron-ore prices offset higher shipments and slightly lower production costs. The price the company received for its iron ore fell by nearly one-fifth year over year.

Otranto said Fortescue is not concerned about China’s high level of steel exports:

“Even if the steel leaves the country, the end product often still traces back to China. The Chinese supply chain is very flexible and can move very quickly,” he said.

In its annual report, Fortescue noted that uncertainties in U.S. trade policies weighed on iron-ore prices, but Otranto said the impact of changes in the U.S. has so far been “very limited” in the iron-ore market.

China is the world’s largest importer of iron ore. Otranto emphasized that demand for Fortescue’s products remains strong and that the company’s priority is keeping customers satisfied and maintaining smooth market flows:

“Our customers are happy, our products have good price support, and flows are seamless. These are our main points of focus,” he said.

Some analysts forecast that iron-ore prices could gradually decline over the next year or two as China’s steel output falls and supply increases, though they acknowledge that infrastructure investments could support steel demand. Fortescue expects the iron-ore market to remain relatively stable and balanced in the coming period.