Ferrexpo daily pellet output drops 4% m/m in June

Ukraine’s largest iron ore pellet exporter Ferrexpo
(FXPO LN) produced 901 kt of pellets in June, which amounts to 30.0 kt per day,
a 3.8% m/m decrease, according to our analysis of the company’s 2Q19 production
report released on July 5.

In 1H19, Ferrexpo’s pellet output amounted to 5.35 mmt
(29.6 kt per day), a 5.0% yoy gain. The FY19 production guidance remained
unchanged at 10.6 mmt.

The company said in its report that in 1H19 its sales
volumes rose approximately 4% yoy to 5.0 mmt and the average C1 cost of
production was approximately USD 46/t (vs. USD 43/t in FY18). Ferrexpo said
that its average received price jumped 29% in 1H19 vs. the average FY18 price
owing to stronger iron ore prices and premiums for iron ore pellets.

Net debt on June 30 was USD 277 mln, down from USD 339
mln on Dec. 31, the report said. Ferrexpo’s cash position on June 30 was
approximately USD 90 mln, and the available debt facilities amounted to USD 40
mln.

Dmytro Khoroshun: We
tentatively expect Ferrexpo’s 2019 production volume to be in line with the
company’s guidance of 10.6 mmt (about 29.1 kt per day), flat yoy. Nevertheless,
we note the opportunity for Ferrexpo to boost its sales and production volumes
in 2019 because of the Vale mine disaster in Brazil.

We expect Ferrexpo’s 1H19 EBITDA to have reached
USD 350-375 mln, or a 50-60% yoy jump.