Interim Management Statement

RNS Number : 6503A

Ferrexpo PLC

13 October 2009

 



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
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)
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:                           [phone]

Gavin Mackay

Pelham PR                       [phone]

James Henderson           [phone]

Evgeniy Chuikov              [phone]

James MacFarlane        [phone]

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.

 

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