SGOK daily output recovers, CGOK flat mom in February

Northern Iron Ore (SGOK UK) produced 813 kt of pellets (+31% mom) in February, Interfax reported on Feb. 6. Central Iron Ore (CGOK UK) manufactured 190 kt of pellets (-10% mom) and beneficiated 552 kt of concentrate (-5% mom). In 2M13, SGOK’s pellet production fell 21.8% yoy to 1.4 mmt, while CGOK’s output slid to 1.2% to 401 kt. Meanwhile, iron ore concentrate output at CGOK grew 10.6% yoy to 1,136 kt.

Roman Topolyuk: In daily terms, SGOK pellet production recovered 46% mom (to 29 kt per day) as a result of renewed output after equipment repairs, which were completed in January 2013. Due to partial idling in January, SGOK would have to operate at a daily production rate of 29 kt by the year’s end to produce as much iron ore products this year as in 2012. This is not a trivial task, given that average daily output was just 27 kt in 2012 and a weaker iron ore market is expected in 2H13. We see that only restoring iron ore products consumption (i.e. steel production) domestically, within parent holding Metinvest, will enable SGOK to keep pellet production flat yoy. It’s positive that CGOK increased its production of iron ore concentrate, its key product, in 2M13. The mom decline in concentrate production is explained by the difference in days in February.