6 October 2022

Due to slump of Ferrexpo export in a view of logistics problems in Q3 2022 the company significantly decreased volumes of iron ore pellets output.

In total since July and till September Ferrexpo produced 905k tons of pellets, by 57% lower q-o-q and by 66% lower y-o-y.

Main reason of such dynamics are logistic issues with pellets export, as Ukrainian sea ports are blocked (except for grains corridor), while other routes are much slower and much more expensive.

We note significant increase of transportation costs by railway and barges to Europe, which resulted from quite a big demand (especially from grains exporters) and due to restricted supply and bottlenecks at the borders of Ukraine with Poland and Romania.

So, taking all this into account, in Q3 Ferrexpo operated with one out of four pelletiser lines.

Sales of the company in reporting period made 1M tons of pellets, by 65% lower y-o-y, so we can expect significant worsening of financial performance as well.

On positive side, Ferrexpo has strong balance sheet with absence of debt and cash in amount of $171M as of 30/06/22.