Cleveland-Cliffs lowers 2019 pellet sales outlook
US iron ore producer Cleveland-Cliffs cut its 2019 sales volume expectations for iron ore pellet by 2.5pc amid lower third quarter volumes, unfavorable export economics and timing issues.
Cleveland-Cliffs projects it will sell 19.5mn gross tons (gt) of iron ore pellet in 2019, down from its previous outlook of 20mn gt.
Third quarter sales decreased to 5.75mn gt from 6.48mn gt a year earlier, even as production volumes increased by 9pc to 5.16mn gt. Sales were lower despite higher inter-company sales directed to its under-construction hot-briquetted iron (HBI) plant in Toledo, Ohio.
The company anticipates that currently weak US steel prices will abate in time for the HBI plant start up next year. The 1.9mn metric tonne (t)/yr Toledo HBI plant is on track to begin production in the first half of 2020 after finishing its furnace reactor tower in late September.
Revenues for the quarter fell by 25pc to $556mn, while profits dropped to $91mn from $438mn a year earlier.
Cleveland-Cliffs earned a $96/gt margin on its sales of iron ore pellet in the third quarter, down from $106/gt in the same period of 2018 and the six-year high of $113/gt hit in the second quarter of 2019.
The company expects to earn $101-106/gt on mining and pelletizing for the remainder of 2019 contingent on an $86/t iron ore, $479/short ton hot-rolled coil price and $36/t pellet premium.
source: Argus Media
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