Ferrexpo production falls 7pc in 2017 after maintenance

Ferrexpo reported higher production of iron ore pellets in the fourth quarter, though the Ukraine-based company's output for 2017 was down on the previous year due to earlier maintenance of its pelletiser machine.

Production of 2.79m tonnes of pellets in the fourth quarter was up 12% compared to the third quarter, but was down more than 5% from the 2.95m tonnes served up in the forth quarter of 2016.

For the whole of 2017, 10.39m tonnes were produced, down 7% on 2016 and roughly 10.4m tonnes were sold, with sales volumes down from 11.7mt in 2016.

The average received pellet price in 2017 was not disclosed, though Ferrexpo described is as having “increased significantly”, reflecting a 22% increase in the average 62%-iron price and a “notable increase” in the pellet premium.

Cash cost of production for the full year 2017 was roughly $33 per tonne from $29 a year ago “due to higher commodity prices impacting input costs, local inflation and lower production levels”.

Ferrexpo ended the year with around $400m of net debt, down from $589m and the company’s lowest debt since 2011, and available liquidity was $310m at the end of the year, up from $145m.

Full-year production "was somewhat lower than we had originally hoped for", said analyst Yuen Low at Shore Capital, albeit this was not a surprise given the first-to-third quarter production results, though the maintenance and refurbishment programme was longer than expected.

"On the bright side, prices and hence financial performance have been strong," he added.