Ferrexpo´s production to take hit from lack of power supplies
Power restrictions in Ukraine during the peak demand hours of the day will impact Ferrexpo´s production of iron -ore pellets, although authorities are introducing measures to address the current situation.
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In December, total pellet production is expected to be 140,000 tonnes lower than planned. Over the 11 months ending on 30 November the company produced 10.2m tonnes, for a 3.2% increase.
The above is the result of lower domestic coal production and low stocks of the fuel at power stations.
However, the firm´s shipments for this month will not be affected.
Should Kiev´s attempts to resolve the lack of energy supplies not bear fruit then capacity at Ferrexpo´s processing facilities will remain at around present levels in the first three months of the new year, but with improvement expected thereafter.
Under such a scenario deliveries under long-term contracts will be prioritised over spot sales.
Lastly, the firm called attention to the sharp depreciation seen in the Ukrainian currency year-to-date. That saw Ferrexpo´s cash cost of production drop to an average of $44 per tonne in November.
Financial liquidity in Ukraine is being maintained at approximately two months´ worth of the funding needed to ensure operations and capital expenditues are shielded as far as possible from the volatility in capital markets.