Ferrexpo boosts pellet production 6% in 7M15

Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPOLN, FXPO LN) boosted its pellet production 6% yoy to 6.7 mmt in 7M15 following the debottlenecking of its concentrate production, which was finalized in 2014, and the expansion of iron ore mining at its Yeristovo Mine. Pellet production in July came in at 886 kt (-5% m/m, -7% yoy) due to certain scheduled maintenance work during the summer months.

Roman Topolyuk: Ferrexpo is on track to meet our projections of 11.6 mmt pellets produced in 2015 (+5.2% yoy), as production volumes should bounce back in the autumn months. Ferrexpo’s market position is solid as the company have almost completed the switch to production of pellets with 65% Fe grade: 88% of totally produced pellets in 1H15 were higher quality, while previously the product mix had been equally split between pellets of 62% and 65% Fe grade.

This focus may be maintained through the year end, thus better matching customer preferences. Ferrexpo, as a producer of pellets, is also better off compared to Ukrainian producers of iron ore concentrate, which are balancing at just a couple of dollars above breakeven level, with iron ore fines prices being USD 56/t in China.