Ferrexpo daily pellet output drops 24% m/m in July

Ukraine’s largest iron ore pellet exporter Ferrexpo
(FXPO LN, FXPOLN) produced 5.89 mmt of pellets in 7M17, Interfax-Ukraine
reported on August 11 based on preliminary results it received. This is a 10.5%
decrease yoy.

The results imply Ferrexpo produced 732 kt of pellets
in July, 15% less yoy. In average daily terms, the company’s output dropped 24%
m/m in July to 23.6 kt per day.

Andriy Perederey: Ferrexpo’s
reduced output is probably the result of maintenance work on pellet line #2
that involved a 21-day shutdown, as mentioned in the company’s 1H17 financial
report. The company didn’t specify when this maintenance would have been
performed, so we estimate this was completed in July based on the output
number. That suggests the company will restore its output in August to nearly
reach its full capacity.

However, based on the recent data, we see the
company will be able to produce no more than 10.8 mmt of pellets in 2017, which
is less than we earlier expected (11.0 mmt) and less than last year’s result
(11.2 mmt). We retain our neutral view on Ferrexpo Eurobonds.