One of the worst performers on the local market today has been the Fortescue Metals Group Limited (ASX: FMG) share price.
In late afternoon trade the iron ore giant's shares are down almost 4% to $4.86.
Why are Fortescue Metals' shares in the red?
This morning Fortescue provided the market with an update on its production activities for the quarter ending September 30.
Although the company reported an impressive 10% reduction in its cash costs to US$12.15 per wet metric tonne compared to a year earlier, almost no improvement was made on the prior quarter.
Furthermore, the market appears to have been underwhelmed by its production during the quarter.
According to the release, Fortescue produced 45.7 million tonnes of iron ore during the first-quarter of FY 2018. This was an 15% decline on the 53.5 million tonnes of iron ore produced in the prior quarter and an 8% drop in production from the first-quarter of FY 2017.
In addition to this, the amount of ore shipped also declined. Total ore shipped fell 2% quarter-on-quarter to 40 million tonnes, though this was in line with previous guidance.
Finally, perhaps the main catalyst for today's decline was the downward revision of its price guidance.
Based on current market prices Fortescue has revised its FY 2018 price realisation guidance to between 70% and 75% of the Platts 62 CFR index.
Previous guidance had been for price realisation between 75% and 80% of the Platts 62 CFR index.
Should you buy the dip?
With its shares down almost 20% since the end of August, I do think that Fortescue looks attractive again.
While I would choose industry peer BHP Billiton Limited (ASX: BHP) ahead of it due to its diversification, I feel that the risk/reward on offer with Fortescue right now is reasonably compelling.
Though it is still one of the more high risk investment options on the market, let's not forget.