The recently released Q3 update released by Kumba Iron ore exceeded market expectations with production having increased by a staggering 33% quarter on quarter (q/q). The improved output was led by its Sishen operations which see’s recent restructuring equating to improved operational efficiencies and in turn a 46.5% increase in production (q/q) at the mine.
Total sales over the period grew 14.3% q/q despite a 24% contraction in sales domestically, as export sales (which makes up the bulk of total sales) managed to increase 18.5%.
While the quarter’s production and sales for the period was good on a relative basis, markets will be concerned about the sustainability of the recent run in the underlying price of iron ore. Iron ore supplies continue to rise while the steel making ingredient faces lower output in the world’s largest (by far) consumer of the base metal.
In terms of a longer term outlook, a Thompsons Reuters poll of 16 analysts have an average rating of sell on Kumba Iron Ore.