Northern, Central Iron Ore increase pellet output 1.1x yoy in 4M

Northern Iron Ore (SGOK UK) reported 880 kt of pellet production (-4% mom) in April, while Central Iron Ore (CGOK UK) showed a 2.3x mom decrease to 90 kt. Concentrate output was broadly flat mom at both companies. This implies Northern Iron Ore increased pellet output 8.9% yoy (to 3.6 mmt) and Central by 9.0% yoy (to 705 kt) in 4M12.

Roman Topolyuk: The monthly drop in Central Iron Ore’s output was expected, most likely caused by the start of regular repair works at its pelletizing machine (see our news of April 3). Northern Iron Ore’s result for April is 10% below management guidance, which we attribute to an unexpected decrease in demand. All in all, we expect Northern and Central Iron Ore to report flat yoy production this year, with an insignificant upside possible. Taking into account 4M12 results, we confirm our FY12 forecast for pellet production at Northern and Central Iron Ore at 10.4 mmt (+1% yoy) and 2.2 mmt (flat yoy) respectively.