Northern Iron Ore pellet production drops by a third yoy in January

Northern Iron Ore (SGOK UK) produced 33.5% yoy fewer pellets in January, or 618 kt (+35% mom), while iron ore concentrate output slid 0.3% yoy to 1.3 mln tonnes (+11% mom). Another Metinvest iron ore producing subsidiary, Central Iron Ore (CGOK UK), improved pellet production 1% yoy (-7% mom) and concentrate output 9.4% yoy to 584 kt (+6.5% mom).

Roman Topolyuk: The steep yoy decline in pellet production can be explained by regular repairs at one of SGOK’s pelletizing machines, which the company runs approximately once a year for more than a month. We assume SGOK finalized these repairs in January and will restore pellet production in February. The next enterprise to reduce monthly pellet production to conduct repairs may be CGOK, subject to availability of funding approval from its parent company, Metinvest (METINV). Both iron ore producers have been aiming to sell more of their products beyond Metinvest in order to maintain flat output in the following quarters.