logo-loader
viewFerrexpo PLC

Ferrexpo shares advance as Barclays sees iron pellet premiums rising

Barclays moved its rating to ‘overweight’ from ‘underweight’, and, more than doubled its price target

mining, iron pellets
The new target sees some 31% upside

Ferrexpo PLC (LON:FXPO) has been upgraded by Barclays, which highlighted premium iron pellet pricing as a positive factor for the investment case.

The upgrade is driven by new supply dynamics - in other words, potential shortages - brought on by environmental restrictions in some regions, stricter emissions controls, and winter cuts.

Price target more than doubled​

Analyst Kennedy Nyangoni highlighted that the changing economic environment comes at ‘an intriguing time’ amid annual pellet premium negotiations.

Barclays moved its rating to ‘overweight’ from ‘underweight’, and, more than doubled its price target to 300p from 140p.

The new target suggests some 31% upside versus the present price, which was itself boosted - up 8.5% today at 227.5p.

“Significant increases in spot pellet premiums drive upgrades to our forecasts and price target for FXPO, and should lead to consensus 2019E EPS rising substantially, in our view,” Nyangoni said.

The analyst added: “Spot pellet premiums stand at $78 per tonne FOB vs. $58 per tonne contracted for 2018.

“The recent move has been underpinned by anticipation of broader application of winter cuts starting in October.

“We expect further upward pressure short term from news yesterday that world 2 pellet producer LKAB has shut down one of its mines for ‘several months’ leading to c.1mt of supply losses. Spot prices at the time of negotiation are typically a good guide for the annual contract.”

Quick facts: Ferrexpo PLC

Price: 135.55 GBX

LSE:FXPO
Market: LSE
Market Cap: £797.88 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Iofina PLC's Tom Becker updates on Organic Vines investment and IO#8...

Iofina PLC's (LON:IOF) Tom Becker speaks to Proactive London's Andrew Scott soon after announcing their investment in Organic Vines - a hemp seed production and genetics firm. Becker says they're anticipating to turn a profit of US$1.8mln by mid-2020. He also updates on the construction of...

10 hours, 38 minutes ago

RNS

Update statement on AGM voting results

12 hours, 7 minutes ago

Holding(s) in Company

6 days, 12 hours ago

Director Declaration

1 week, 5 days ago

Director Declaration

3 weeks, 1 day ago

Board Statement

4 weeks, 2 days ago

2 min read