Ferrexpo pellet output drops 9% yoy in 1H17
6 July 2017
Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO LN, FXPOLN) produced 5.16 mmt of pellets in 1H17, according to its July 6 production report. This implies a 9.8% yoy decrease, or a 9.3% decrease yoy on a daily average basis. Pellet production from own iron ore dropped 9.9% yoy to 5.14 mmt, while production from third party concentrate declined 7.1% yoy to 0.02 mmt in 1H17. Also, lower-grade 62% Fe pellets production fell 29% yoy to 0.26 mmt in 1H17.
In 2Q17, Ferrexpo’s pellet output was 2.54 mmt, which is a 3.3% drop qoq and 11.0% drop yoy.
The company attributed the decline in pellet production to 55 days of refurbishment work that stared on March 20.
Andriy Perederey: Based on the results, we calcuate Ferrexpo produced 925 kt of pellets in June, which is 11% more than in May (on a daily average basis). This increase is the result of refurbishment being completed in mid-May. The company has the ability to boost its pellet output to over 2.8 mmt in 3Q17.
These interim results prompt us to downgrade our expectation of Ferrexpo’s 2017 production to 11.0 mmt of pellets (-1.8% less yoy) from 11.3 mmt. We retain our neutral view on Ferrexpo Eurobonds.
