Ferrexpo premiums set to widen

But what comes next? The big thematic drivers that have worked so well are still there: China’s reform of its steel capacity and environmental standards are propping up global steel margins, thereby upping the focus on productivity, and demand for high-quality pellets. And while the market remains cautious about iron ore prices, Ferrexpo expects its pellets to fetch a higher premium than the 40 per cent surplus to fines averaged last year. Confidence here rests on the visibility provided by long-term supply agreements.

The two negatives in these accounts – a 7 per cent drop in output and a 17 per cent increase in cash costs to $32.3 (£23) per tonne – were both linked to planned maintenance work. Another 65-day pellet line shutdown is forecast in the second quarter of 2018, although output in the second half of this year is likely to exceed the 5.3m tonnes of pellets produced in the last six months of 2017.

On average, analysts expect adjusted pre-tax profit of $383m and EPS of 54.7¢ this year, down from estimates of $433m and 61¢ in 2017.