Ferrexpo third-quarter production up but average prices fall

17th Oct 2013 11:16

Ukrainian iron pellet producer Ferrexpo said production was up in its third quarter but average prices were down.The FTSE-250 company reported total pellet production rose 4% in the three months to the end of September and was up 12.5% to 8m tonnes in the first nine months of the year helped by the company ramping up production at its Yeristovo mine.Sales volumes for the nine months were 7.6m tonnes, up 9% on the same period in 2012, but undershooting production levels because of the timing of shipments.The average realised price in the third quarter fell 4.5% which Ferrexpo blamed on the lagging nature of fixed price settlements for a large amount of the volumes it had sold to its traditional markets.However, the average cost of production has been on a downward trajectory thanks to cost efficiencies from higher volumes and the company expects this to continue as it ramps up production at its Yerisotovo mine. Investec analyst Louise Collinge, who has a buy rating on the stock, said: "The company's costs look impressive to us. We estimate a FY13E C1 cash cost of $59.9 per tonne and we believe the group is well placed to continue to drive its costs down."Shares in Ferrexpo were down 0.82% to 192.5p at 11:41 on Thursday.TB