Ferrexpo’s Rescue Hangs in the Balance as Iron Ore Drop and Blocked VAT Tighten the Screws
05.06.2026 - 17:29:21 | boerse-global.de
The clock is ticking for Ferrexpo on two fronts simultaneously. Iron ore prices have slumped to a six-week low just as the Ukrainian pellet producer’s cash pile shrinks toward a critical threshold, and the company’s biggest source of working capital — roughly $80?million to $90?million in VAT refunds withheld by the state — remains frozen. Management has warned that without a capital injection of at least $100?million, the miner will run out of accessible funds by the end of August?2026.
The most-traded iron ore contract on the Dalian Commodity Exchange fell to 767.5?yuan per tonne, while the Singapore Exchange benchmark settled at $102.70 a tonne — the weakest level in more than six weeks. The decline was driven by demand jitters in China, where steel margins are shrinking, steel consumption is softening, and input costs are rising. Rebar, hot-rolled coil and wire rod all lost ground in tandem. For Ferrexpo, which ships virtually all its pellets to European customers but depends on global price benchmarks for revenue, the slide comes at the worst possible moment.
The company’s liquidity position is deteriorating by the week. At the end of the first quarter, Ferrexpo held roughly $35?million in total cash, down from $47?million at the turn of the year. Of that, only $22?million was net available; the rest sits on accounts at a bank that is now in liquidation. By mid-April, net liquidity had dropped further to about $20?million, with just $17?million readily accessible — a figure that excludes any funds still trapped at the stricken MBaer Merchant Bank. The blocked VAT refunds, tied up in legal disputes surrounding the majority owner, compound the pressure: that missing $80?million to $90?million would have partially covered operational shortfalls.
Should investors sell immediately? Or is it worth buying Ferrexpo?
Production has already been slashed. In the first quarter of 2026, Ferrexpo produced just 592,751?tonnes of iron ore products — a 72?percent plunge year-on-year. Pellet output stood at 524,926?tonnes, down 61?percent. Only one of the company’s four pellet lines is now running, and that single line is kept going by reduced working hours, halted non-essential spending, and unreliable energy supplies. War-related risks, power outages, logistics bottlenecks, and ongoing legal proceedings against the main operating subsidiary are all dragging on output.
Against this backdrop, the annual general meeting scheduled for late June has been stripped of meaningful substance. Because the audited 2025 financial results are still not ready, four standard resolutions — adoption of the annual report, reappointment of the auditor, the auditor’s fee, and the directors’ remuneration report — have been postponed indefinitely. Management has been explicit that the company’s ability to continue as a going concern hinges on a successful capital raise. To that end, the board has proposed a conditional placing with a minimum target of $100?million, the only viable option within the required timeframe. Meanwhile, long-serving supervisory board member Vitalii?Lisovenko will not stand for re-election and departs at the close of the AGM.
The capital injection is the sole lifeline on the table. Without it, Ferrexpo’s own projections show available cash lasting only to the end of August 2026, assuming stable iron ore prices, energy costs and operating conditions — none of which are guaranteed. The falling ore price only shortens that runway, eating into revenue on an already minimal production base while fixed costs remain stubbornly high.
Ferrexpo’s shares have been suspended from trading on the London Stock Exchange since May?2026 and will remain so until the 2025 annual report is filed and the funding gap is closed. That leaves shareholders powerless to react to the worsening commodity backdrop. With the clock ticking toward a cash cliff just a few months away, the next few weeks will determine whether the market will provide the $100?million that Ferrexpo so urgently needs.
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