Market Reaction - Ferrexpo
- Mickey Perry
- Oct 7, 2024
- 2 min read
Publish Date: 7 October 2024
Time Period: 3Q 2024 (Third Quarter to the end of September 2024)
- Ferrexpo maintains commitment to worker safety with a 12-month LTIFR of 0.37, below the five-year average of 0.52.
- The Company operated one to two pelletising lines throughout the quarter, focusing on higher-quality products.
- Total production for 3Q 2024 was 1,397,698 tonnes, comprising 1,269,727 tonnes of pellets and 127,971 tonnes of 67% Fe concentrate.
- Year-to-date, total production hit 5,125,034 tonnes, a 47% increase from the same period in 2023.
- Ferrexpo DR pellets continued production, with a total of three shipments to two customers.
- Lucio Genovese, Interim Executive Chair, acknowledged the challenging operating and macroeconomic environment, highlighting high electricity tariffs and freight rates as main issues affecting the company costs.
- Ferrexpo has sought to mitigate cost pressures by focusing on sales of higher quality iron ore products and expanding the customer base, particularly in the MENA region.
- Genovese also noted the temporary fall in iron ore prices to US$ 100 per tonne but indicated a recovery spurred on by Chinese economic stimuli.
- Nikolay Kladiev, Group CFO, echoed the impact of iron ore prices and high input costs, and stated the company's cash position at the end of Q3 as approximately US$ 100 million.
- Kladiev suggests a short-term uplift in iron ore prices due to China's domestic policy adjustments.
The latest update from Ferrexpo offers a fairly negative outlook. Q3 production was down by 16.4% compared to Q2, with the company facing several challenges, including low iron ore prices, rising input costs, and margin pressure. Ferrexpo is also grappling with high energy costs, driven by the need to import energy from other countries to keep production going. On top of that, higher freight rates and increased premiums for war risk insurance are adding to their difficulties.
The company’s CFO pointed out that while there may be some optimism around potential increases in iron ore prices, the volatility seen in Q3 makes it uncertain whether these prices will hold or improve. As he noted, "the recent volatility of the third quarter does not provide any certainty that prices will remain at these levels or improve further."
Despite the overall negative news, it's possible that much of this information was already reflected in the share price. Interestingly, Ferrexpo’s stock remained flat, considering broader market experienced a slight decline, suggesting that investors may have already adjusted their expectations in light of these ongoing challenges.
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