Last checked at 13 Oct 2009 07:00
13 October 2009
Ferrrexpo PLC
Interim Management Statement
Ferrexpo plc ("Ferrexpo" or the "Group") today issues its interim management statement for the period from 1 July to 13 October 2008, in accordance with the UK Listing Authority's Disclosure and Transparency Rules.
Highlights
Producing at full capacity and increasing 65% Fe pellet output
Strengthened demand in core markets
Majority of sales now on contract basis
Production Report for Q3 2009
| Tonnes '000 | Q3 | Q2 | Change | Q3 | Change | YTD | YTD | Change | ||
| 2009 | 2009 | % | 2008 | % | 2009 | 2008 | % | |||
| Production from own raw materials | ||||||||||
| Iron Ore | 7,193.3 | 7,501.4 | (4.1) | 7,238.6 | (0.6) | 20,886.8 | 21,599.9 | (3.3) | ||
| Concentrate | 2,774.0 | 2,702.9 | 2.6 | 2,772.8 | 0.0 | 7,764.5 | 8,212.7 | (5.5) | ||
| Pellets |
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| 62% Fe | 1,130.2 | 1,214.4 | (6.9) | 1,194.0 | (5.3) | 3,250.5 | 3,778.1 | (14.0) | ||
| 65% Fe | 1,117.5 | 1,026.0 | 8.9 |
| 1,071.0 | 4.3 |
| 3,120.9 | 2,991.3 | 4.3 |
| Pellets Total | 2,247.7 | 2,240.4 | 0.3 | 2,265.0 | (0.8) | 6,371.4 | 6,769.4 | (5.9) | ||
| Production from purchased raw materials / tolling | ||||||||||
| Pellets | ||||||||||
| 62% Fe | 30.8 | 15.0 | 105.3 | 240.1 | (87.2) | 45.8 | 332.0 | (86.2) | ||
| 65% Fe | 0.0 | 0.0 | - |
| 0.0 | - |
| 0.0 | 0.0 | - |
| Pellets Total | 30.8 | 15.0 | 105.3 | 240.1 | (87.2) | 45.8 | 332.0 | (86.2) | ||
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| Pellets Grand Total | 2,278.5 | 2,255.4 | 1.0 |
| 2,505.1 | (9.0) |
| 6,417.2 | 7,101.4 | (9.6) |
Pellet production from own raw materials rose by 0.3% in Q3 2009 compared to the previous quarter
Ferrexpo produced at full capacity throughout Q3 2009, for the second consecutive quarter
Higher grade 65% Fe pellet output has increased by 4.3% in the year to date, despite deliberately increasing the production of 62% Fe pellets in September to meet sales contract requirements
Pellet production from purchased concentrate has increased in Q3 but remains a small proportion of total production - Ferrexpo will seek to increase this business if margins permit
Sales and Prices
Sales volume in Q3 2009 was 2,414kt
Average achieved DAF/FOB price in Q3 2009 was US$62.1/t, an improvement of 4.7% over the average price achieved in Q2 2009
Demand has strengthened in Ferrexpo's core markets as Europe restocks and the global economic outlook improves
Ferrexpo has reverted to selling the majority of its production to its portfolio of long term contract customers during Q3 2009
Spot market pellet sales to China were suspended at the end of July in favour of increasing term-contracted sales, but Ferrexpo continues to supply its long term contract customers in China
Ferrexpo has now settled contract prices with customers representing over 85% of its long term contract portfolio by volume
These prices will apply to the relevant contracted period from Q4 2009, with most applicable through to 31 March 2010
The new contract prices reflect a decrease of approximately 48.3% compared to the contract prices settled for the 2008/2009 contract year
All Ferrexpo markets except for Ukraine are now normalised in terms of long term contractual offtake which will be reflected in pellet sales from Q4 2009
Ferrexpo's Ukrainian long term contract customer steel production is still in transition to higher capacity utilisation
Ferrexpo has long term contracts in place for approximately 90% of its output, with the remainder comprising trial cargoes to prospective new long term customers
Costs
Average C1 cash cost of production for Q3 2009 was US$33.5/t, an improvement of 2.9% over the average C1 cost in the first half of the year
C1 cost in September was US$32.9/t
Ukrainian Hryvnia weakened against the US dollar by approximately 7% during Q3
Business Improvement Programme initiatives continue to reduce unit utilisations of key cost inputs
Kostyantin Zhevago, Ferrexpo CEO, said:
"Ferrexpo continues to deliver a strong performance despite weak global markets. I am very pleased with the progress we have made in switching our sales back to our portfolio of long term contract customers, which returns us to our higher margin core business and highlights the quality of our customer relationships. It should be noted in particular that the majority of Ferrexpo's European customers are now taking their full contract volumes, despite in many cases not being at 100% capacity utilisation themselves. This indicates the growth in market share that Ferrexpo has achieved in these markets."
Next Update
Ferrexpo will release a production update for Q4 2009 on 15 January 2010.
For further information, please contact:
Ferrexpo: +44 207 389 8304
Gavin Mackay
Pelham PR +44 207 337 1500
James Henderson +44 207 337 1501
Evgeniy Chuikov +44 207 337 1513
James MacFarlane +44 207 337 1527
Notes to Editors:
Ferrexpo is a Swiss headquartered resources Group with assets in Ukraine, principally involved in the production and export of iron ore pellets, used in producing steel. Current output is over 9 million tonnes per annum, most of which is exported to steelmakers around the world. The Group is listed on the main market of the London Stock Exchange under the ticker FXPO. For further information please visit www.ferrexpo.com.