Fortescue’s Record Problem

Hey Superheroes,

U.S. markets recovered Wednesday after a brutal Tuesday sell-off triggered by Trump’s Greenland rhetoric, with the S&P 500 climbing 1.2% as the president backed away from tariff threats against Europe and delivering another TACO trade moment. Earnings season kicked into high gear with mixed results from major banks, while chip stocks rallied following strong numbers  reported from Taiwan Semiconductor (NYSE:TSMC).

Gold and silver continued to hit record highs as safe haven demand increased on escalating geopolitical risk.

Here’s what moved markets this week.

Fortescue Posts Record Output as Iron Ore Tensions Rise 

Fortescue (ASX:FMG) shipped a record 100.2 million tonnes of iron ore in the six months to December 31, beating the previous period by 3% and marking its highest-ever first-half output.

But the achievement comes amid escalating tensions with China over iron ore pricing and market structure. Beijing’s creation of China Mineral Resource Group – a single purchasing agency buying ore for most major Chinese steel mills – has fundamentally altered the dynamics of Australia’s most lucrative export industry.

Fortescue shares fell 4.9% to A$21.54 on Thursday despite the record performance, as investors focused on higher production costs and concerns about future pricing power.

🇨🇳 The China strategy 

Fortescue’s mining chief Dino Otranto acknowledged the challenge posed by CMRG, saying the centralised buying group conflicts with the company’s free-market ideology. But Fortescue is adapting its approach to maintain smooth sales into China, which provided 87.4% of revenue in FY25.

The strategy centres on deepening commercial ties beyond simple iron ore transactions. Fortescue surprised markets in August by securing a yuan-denominated loan worth roughly A$4.5 billion from Chinese banks. The company has also ramped up purchases of Chinese equipment and infrastructure.

Fortescue is procuring battery storage from BYD, solar panels, wind turbines and steel for maintenance facilities from Chinese suppliers. In September, the company shifted a portion of electric truck orders from Germany’s Liebherr to China’s XCMG in what Otranto described as the largest-ever Chinese mining truck order.

Unconfirmed reports suggest Fortescue and Rio Tinto (ASX:RIO) have offered concessions to CMRG, including trialling iron ore sales through price index provider Fastmarkets rather than industry incumbent Platts. Analysts believe this strategy aims to weaken miners’ leverage by fragmenting the industry across multiple price providers.

📉 The BHP contrast 

BHP (ASX:BHP) has declined to offer similar concessions and admitted this week that revenues have suffered as a result. A growing number of ships containing BHP iron ore sit idle off the Chinese coast.

Otranto said Fortescue’s approach has enabled consistent sales despite market volatility, taking an apparent swipe at BHP’s difficulties.

The benchmark iron ore price measured by Platts stood at US$103.20 per tonne on December 21. Most analysts, including the Australian government’s Department of Industry, expect prices to decline in coming years as increased supply meets weaker demand.

Fortescue shipped 4.3 million tonnes of magnetite concentrate from its Iron Bridge project during the period, below analyst expectations. The company needs to accelerate production to meet its minimum 10 million tonne annual target.

Netflix Slides on Warner Bros Cash Bid 

Netflix (NASDAQ:NFLX) shares slipped 2.13% to US$83.54 on Thursday, extending losses following Tuesday’s earnings report despite the company beating Wall Street expectations.

The streaming giant switched to an all-cash bid of US$27.75 per share for Warner Bros Discovery’s (NASDAQ:WBD) studio and streaming operations, holding firm to an US$82.7 billion total valuation. The move aims to block Paramount Skydance’s competing offer, which expired January 21.

🎬 The numbers versus the deal 

Netflix reported fourth-quarter revenue of US$12.051 billion and surpassed 325 million paid memberships. The company projects first-quarter revenue at US$12.157 billion and outlined 2026 revenue targets between US$50.7-51.7 billion, aiming for a 31.5% operating margin.

Advertising revenue more than doubled in 2025, climbing above US$1.5 billion. Co-CEO Greg Peters said the advertising business is expected to roughly double again in 2026 to approximately US$3 billion.

The deal with Warner Bros is a gamble. To pay for it, Netflix is stopping its program of buying back its own stock and is borrowing an extra $8.2 billion. This brings their total ’emergency’ debt to $59 billion – a huge sum usually reserved for buying out other companies.

There are several hurdles ahead. Government regulators could slow down the deal’s approval. Meanwhile, if Netflix loses new subscribers or makes less money from ads, they might struggle to pay off their new debts and cover the high cost of making shows, especially while they are still trying to merge the two companies together.

🔦 Some other things we’re shining the Spotlight on: 

NVIDIA OVERTAKES APPLE AT TSMC: Nvidia (NASDAQ:NVDA) looks set to have overtaken Apple (NASDAQ:AAPL) as TSMC’s biggest customer in at least one or two quarters of 2025, driven by huge demand for AI-focused GPUs. During an August visit, TSMC CEO CC Wei reportedly told Apple executives to expect higher prices and less certainty around priority access to chipmaking capacity. Apple still matters, thanks to the sheer breadth of its chip lineup. But in the near term, Nvidia’s tightly focused orders at the most advanced nodes are taking up more space on the factory floor

OPENAI SEEKS US$50B MIDDLE EAST FUNDING: OpenAI is in talks with Middle East sovereign wealth funds for a new funding round expected to total around US$50 billion. The round is expected to close in Q1 2026. OpenAI closed a US$40 billion financing led by SoftBank last year and finalised a US$6.6 billion share sale in October that boosted valuation to US$500 billion. Find out how likely it is to be listed in 2026 and learn about other upcoming IPOs in our blog.

AUSTRALIAN STRATEGIC MATERIALS TAKEOVER: Colorado-based Energy Fuels (NYSEARCA:UUUU) won board support for a A$530 million takeover of Australian Strategic Materials (ASX: ASM), giving the U.S. company control of ASM’s undeveloped Dubbo mine and its South Korean metal factory. Energy Fuels may drop ASM’s A$740 million NSW refinery plan if the bid succeeds. ASM shares surged 120% to A$1.59 on the takeover announcement on Wednesday.

Please note: The ASX will be closed Monday, January 26 for the Australia Day public holiday.

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