Swiss-headquartered company Ferrexpo, whose main interests are in Ukrainian iron ore assets, is reorienting its sales to its traditional European markets, where most of the company's long-term customers are based, and is gradually decreasing its deliveries to the Asian spot market.
According to media reports, Ferrexpo's main iron ore production asset located in Ukraine, Ferrexpo Poltava Mining, is to increase its pellet deliveries to Europe by two percent in September this year. The company's total iron ore exports to its traditional East European markets is expected to amount to 750,000 mt in September, while its deliveries to China will decrease by more than 45 percent. The company intends to revert to selling 90 percent of its production under long-term framework agreements, and to reduce its exposure to the seaborne spot market.
Industry experts hold the view that the return of Ferrexpo to its traditional sales markets is due to the worsening of the situation in the Asian market and to the improvements registered in the European market. The warehouse reserves of the European traders decreased in the first half of the year, forcing them start purchase activities in order to replenish their stocks.
Ferrexpo has six long-term framework contracts in China, and is an established seller there. The group supplied 54 percent of its sales volume to China in H1 2009, as compared to 16 percent in the first half of the prior year. Ferrexpo's total pellet sales in the first six months of 2009 amounted to 4.2 million mt. Among the other destinations, 7.7 percent of the company's sales went to Austria, 4.5 percent to Turkey, 13.6 percent to Slovakia, 4.2 percent to Serbia and 11.8 percent were sold domestically in Ukraine.