Ferrexpo pellet production fell 9% yoy in 1Q17

Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO LN, FXPOLN) produced 2,624 kt of pellets in 1Q17, according to its April 6 trading update. Total quarterly output decreased 9.1% yoy and 8.7% qoq. In daily average terms, the 1Q17 output was 8% less yoy and 6.6% less qoq.

Pellet production from own ore decreased 9% yoy to 2,612 kt while production from third party concentrate was almost flat yoy at 11.6 kt.

Andriy Perederey: Ferrexpo’s operating performance declined due to scheduled maintenance work in January and February and a 55-day pellet line refurbishment, which commenced on March 20.

So we expect that April output also will be lower yoy. But the quarterly results support our expectation of 11.3 mmt of pellets to be produced in 2017 (0.9% yoy improvement). We retain our neutral view on Ferrexpo Eurobonds.