5 reasons everyone’s talking about Fortescue shares this week

Fortescue Ltd (ASX: FMG) shares have trended lower this week, down almost 5.5% since Monday.

But the iron ore giant’s stock was back in the green, up 0.4% to $21.95 apiece near the close of trade today.

Fortescue has been in the headlines this week over a number of none market-sensitive initiatives. Let’s investigate.

Fortescue shares slip on large stock sale

Fortescue shares took a hit on Tuesday after news emerged a large investor in the company tendered a massive $1.1 billion block trade of its stock.

This hefty transaction – equating to 1.6% of the company’s market cap at the time – has stirred significant trading activity. According to my colleague Mitch, more than 58 million shares were traded by midday on the day, compared to the usual 5 million average.

And yet, the market is still abuzz with speculation about who the seller was.

Separately, Capital Group, a global fund manager, also reduced its holding in Fortescue shares by almost 1%, bringing its stake down to 6.62% from 7.65%, according to The Australian.

It’s important to note that this sale is separate from the larger block trade, which has no publicly known seller.

Iron ore price fluctuations have also been a significant factor affecting Fortescue shares. The price has retracted from more than US$140 per tonne on 3 January to around US$107 per tonne at the time of writing.

According to Trading Economics, a major reason behind the recent price weakness was economic data that “added to pessimism on ferrous metal demand from China”.

Because the iron ore major is a price taker on the commodity, this decline has put pressure on Fortescue and other iron ore players.

Strategic moves in renewable energy

Fortescue is also strengthening ties with China as part of its energy transition plans. Fortescue chairman Andrew Forrest spoke at the Australia-China CEO Roundtable on Tuesday.

According to a report in The Australian, he highlighted the potential for a supply chain that could significantly reduce emissions while maintaining China’s position as a leading global steel producer.

This collaboration is reportedly a strategic move to achieve Fortescue’s “Real Zero” decarbonisation targets.

And finally, Michael Masterman, a former Fortescue executive now embroiled in a legal battle with the company, has publicly questioned the effectiveness of Fortescue’s hydrogen-based green steel technology.

Masterman claims that his new venture, Element Zero, offers a more energy-efficient solution. It remains to be seen how this scenario will pan out.

What’s next for Fortescue shares?

Investors are keeping a close eye on Fortescue as the company navigates these challenges. The weakness in iron ore prices hasn’t helped the stock lately.

Fortescue shares have now slipped more than 25% this year to date and are down 2% since this time 12 months ago.

The post 5 reasons everyone’s talking about Fortescue shares this week appeared first on The Motley Fool Australia.

More reading

• What’s the outlook for ASX 200 mining shares in FY25?
• Why Beach Energy, Fortescue, Kina Securities, and Melbana Energy shares are dropping today
• Fortescue shares drop as $1.1 billion stake hits the market
• What’s happening with the big 3 ASX 200 iron ore stocks today?
• 3 reasons to be positive on ASX 200 shares in FY25 (and 3 to be wary)

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.