Ukraine-based iron ore miner Ferrexpo expects iron ore prices to decline by an average of $15/mt in H2 2021 on softening demand for iron ore fines. The company said in its H1 2021 earnings report that it expects iron ore prices to average $170/mt by the end of the year.
The group also plans to increase its production of direct reduced iron ore (DRI) pellets in the long term to reduce carbon emissions in steelmaking as these are mainly used in electric arc furnace- or natural gas-based steelmaking, which have lower carbon emissions.
Ferrexpo, which had released its production and sales report in July, noted that its destocking process in H1 had reduced sales by 9pc despite a 2pc increase in production. The firm’s ongoing project to upgrade the capacity of its four pelletizer lines is expected to improve its pelletizer capacity by 0.5-1mn mt per year once it is completed by the fourth quarter of 2021.
Higher iron ore prices and premiums on pellets almost doubled the group’s revenue in H1 2021 to $1.35bn from $776mn in the same period last year, despite the reduction in overall sales volumes. Its cash costs increased to $46.6/mt from $40.9/mt during the same period due to higher energy and fuel costs. Ferrexpo’s EBITDA more than doubled in the first six months of the year to $868mn from $352mn in the same period last year.