Iron ore shipments reached a record 46.5 million tonnes, with C1 costs dropping 7% quarter-on-quarter to US$12.17 per wet metric tonne.

FMG CEO Elizabeth Gaines said the strong quarterly result was delivered while keeping a focus on costs.

"Building on our outstanding operational performance in the quarter, Fortescue has delivered on key strategic initiatives which position us for the next phase of growth while improving safety and productivity, ensuring we remain the lowest cost producer of seaborne iron ore," she said.

The strong quarter took the full-year result to 170Mt shipped at C1 costs of $12.36/t.

While costs came in above guidance of $11-12/t, FMG said the full-year result was equivalent to $11.83/t after normalising for the original assumed exchange rate of 75c and oil price of $53 per barrel.

Price realisation for the quarter was 63% of the Platts 62 CFR index and 65% for the year.

After taking into account all adjustments associated with provisional pricing, FMG received average full-year revenue of $44 per dry metric tonne or 64% of the Platts index.

FMG provided no price realisation guidance for FY19.

RBC Capital Markets reduced its iron ore price forecasts overnight from $65/t to $49/t for the current half, and from $70/t to $63/t for 2019.

"Our analysis suggests that a drop in Chinese steel demand will cause steel margins to fall from their current highs and this is likely to see both de-stocking and an unwind of iron ore premiums and discounts as China margins fall," RBC said.

RBC suggested a period of sub-$50 prices was a concern before stabilisation.

"This analysis has also shown, encouragingly, that this is likely to be the last ‘bad' phase for the iron ore market as it exits the spending binge of the early 2010s," it said.

"Although we do expect economic conditions to be weak in the near-term, over the medium-term, Chinese supply side reforms have created an environment where it will be difficult for utilisation rates to fall much below 80%.

"This should lead to a period of strength for iron ore and very likely increase premiums for grade, quality and pellets."

During the quarter, FMG approved the $1.275 billion Eliwana project, with first ore to be delivered in late 2020 at a higher grade of 60% iron.

Cash on hand at the end of June was $863 million after the repayment of $160 million of senior secured notes and the $264 million payment of the interim dividend.

Gross debt reduced to $4 billion and capital expenditure for the year was $890 million.

FMG has set 2019 financial year guidance at 165-173Mt at C1 costs of $12-13/t with total capital expenditure of $1.2 billion.

"Fortescue is in a strong position for FY19 as we continue to focus on the safety, productivity and efficiency of our globally competitive operations to sustainably deliver shareholder value," Gaines said.

Shares in FMG fell by 1.7% to A$4.48 this morning.