16 February 2017
According to Interfax-Ukraine information in January 2017 Ferrexpo decreased total pellets output by 11.8% vs. corresponding period of previous year to 900k tons.
On our opinion main reasons are high base of January 2016 (1 020k tons of production vs. monthly average of 933k tons in Y2016) and focus of the company on premium 65% Fe pellets production (in a view of stable premiums over 62% Fe iron ore), moreover the company develops relatively new type of production – pellets with 67% Fe content (123k tons produced in Y2016 vs. 40k tons in Y2015).
We believe that decrease of production will not have significant impact on financial performance of Ferrexpo, especially as iron ore price is at about USD 80/t during last three months, despite all negative forecasts on current week it reached more than USD 91.7/t, the highest level since October 2014.
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