Champion Iron (ASX: $Champion Iron Ltd (CIA.AU)$ ) shares ha...
Champion Iron (ASX: $Champion Iron Ltd(CIA.AU$ ) shares have declined around 25% since early January, coinciding with the sharp pullback in iron ore prices from US$140 a tonne to US$100 a tonne. Citi anticipates a challenging June quarter for the company due to winter effects, heightened maintenance downtime and constrained rail capacity.
The analysts flag that approximately 20% to 30% of sales are based on lagged contracts. Champion Iron previously announced that 1.8 million tonnes of sales were subject to provisional pricing adjustments at an expected settlement price of US$150 a tonne. Due to extended Red Sea shipping times, Citi expects provision pricing adjustments in the June quarter to be roughly negative US$33 million or around US$11 a tonne.
"Rail capacity near term has also not likely improved given weather effects so we expect sales of 3.07 million tonnes, down from 3.2 million tonnes in Q3. Given lower production and sales ... we expect a modest rise in unit C1 cash costs and we now assume C$75 a tonne from C$73 a tonne in Q3."
Citi analysts retained a Buy rating but cut its target price from $9.60 to $8.60.
The analysts flag that approximately 20% to 30% of sales are based on lagged contracts. Champion Iron previously announced that 1.8 million tonnes of sales were subject to provisional pricing adjustments at an expected settlement price of US$150 a tonne. Due to extended Red Sea shipping times, Citi expects provision pricing adjustments in the June quarter to be roughly negative US$33 million or around US$11 a tonne.
"Rail capacity near term has also not likely improved given weather effects so we expect sales of 3.07 million tonnes, down from 3.2 million tonnes in Q3. Given lower production and sales ... we expect a modest rise in unit C1 cash costs and we now assume C$75 a tonne from C$73 a tonne in Q3."
Citi analysts retained a Buy rating but cut its target price from $9.60 to $8.60.
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