Ferrexpo increased pellet production by 76% in the first half of the year

Ferrexpo, an iron ore company with assets in Ukraine that is listed on the London Stock Exchange, increased pellet production by 76% in the first half of 2024 compared to the second half of 2023, to 3.297 million tons. This is stated in the company’s report.

In January-June, the company produced 2.836 million tons of premium pellets from its own concentrate (65% iron content), up 55% compared to July-December 2023. Another 298.46 thousand tons of pellets (65% iron content) were produced from third-party concentrate (+498% compared to H2 2023). We also produced 162.64 kt of DR pellets (not produced in July-December 2023).

The production of commercial concentrate for 6 months reached 429.86 thousand tons, which is 171% more than in July-December 2023. The total volume of commercial products produced increased by 83% to 3.73 million tons.

In the second quarter of 2024, Ferrexpo reduced its pellet production by 18% quarter-on-quarter to 1.48 million tons. The company produced 162.64 thousand tons of DR pellets, 1.1 million tons of premium pellets from its own concentrate (-36% q/q), and 215.92 thousand tons of pellets from third-party concentrate (+162% q/q). Concentrate production for the period decreased by 22% q/q to 189.04 thousand tons, while total commercial production reached 1.67 million tons (-19% q/q).

«We are pleased to report strong production results for the first six months of 2024. This is our best performance since the beginning of the full-scale invasion of Ukraine,» commented Lucio Genovese, Interim CEO of Ferrexpo.

According to him, the Group continued to ship products by sea in Q2. It is estimated that more than 800 vessels have sailed through the sea corridor since the end of 2023, of which 90 were carrying steel products. The increase in the number of shipowners willing to charter vessels to Ukrainian ports has a positive impact on transportation, but freight rates for high insurance risks are holding back exports.

«In April-June, other production costs continued to rise, especially electricity prices. Attacks on Ukraine’s energy infrastructure have significantly reduced domestic energy supply. Ferrexpo switched to alternative electricity sources from Ukraine’s European neighbors in advance, which has resulted in minimal disruption to its operations so far,» he added.

In the first half of 2024, Ferrexpo operated two or three pelletizing lines out of four, varying productivity depending on customer demand and logistics capabilities. In Q2, the Group resumed production of DR pellets (FDP).

According to Nikolay Kladiev, the Group’s CFO, the company quickly brought the previously shutdown facilities back online during the first half of the year, which is a testament to its flexibility. The company took advantage of new production and export opportunities, but iron ore prices in Q2 were not as high as in Q1, and these factors, together with rising electricity prices, negatively affected the company’s performance. However, Ferrexpo’s financial position did not deteriorate significantly, and the company continues to invest in projects to maintain and improve the efficiency of its facilities.

As GMK Center reported earlier, in 2023, Ferrexpo reduced pellet production by 36% compared to 2022, to 3.845 million tons. The total production of iron ore products amounted to 4.15 million tons.

Ferrexpo is an iron ore company with assets in Ukraine that is listed on the London Stock Exchange. It produces and exports high-quality iron ore pellets for steel production. Its production assets are Poltava and Yeristovo Mining (100% owned each). The company is also developing Belanovo Mining.