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Tuesday, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
 COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & Mining Consultant for Wood Mackenzie says there is little to suggest the picture is likely to pick up in 2015 with demand set to remain "slower not lower" and therefore prices will remain low for longer.
Addressing delegates at the Mining Indaba conference in Cape Town, Mr Emslie asserts; "It’s hard to believe, but 2015 has started even worse than 2014 finished. Having commenced January just above US$70 a tonne , the TSI 62% Index was trading at US$62/t by the close of the month resulting in a monthly average of US$67/t CFR – its lowest since May 2009."
According to Wood Mackenzie's iron ore market outlook, demand is unlikely to show any meaningful improvement until late Q1 or early Q2 due to a combination of seasonal and cyclical reasons. Mr Emslie adds: "We have lowered our Q1-15 price forecast to US$67/t CFR and our CY-15 price to US$70/t CFR (basis 62% Fe sinter fines)."
Explaining Wood Mackenzie's short-term outlook in more detail Mr Emslie says: "Iron ore prices may be languishing at their lowest level for nearly six years, but it remains difficult to make a positive case for prices in the short term. Chinese steel mills have cut production in recent weeks due to a combination of weak demand and planned maintenance and this is feeding through directly to iron ore requirements. With the Lunar New Year holidays just a few weeks away Chinese steel production will get worse before it gets better. Steel mills will not re-stock in a falling or stagnant market and when they do there should be plenty of slack in the system, as shown by the high level of inventory held at Chinese mines.
Outside of China the picture is similarly uninspiring due to a combination of seasonal and structural factors. Other than the Middle East and India none of the major iron ore importers have shown any meaningful improvement in demand, a situation that is unlikely to change in the short term."
"The outlook for Q2 is marginally better: Chinese mills should start re-stocking post Lunar New Year, driven by seasonally stronger domestic demand and a pick-up in exports of steel products. This should coincide with slightly tighter seaborne supply as Australian exports reach a temporary plateau and high cost suppliers elsewhere remain out of the market."
Wood Mackenzie warns that if the iron ore price remains in the low $60/t range then more closures from mid-tier producers seem likely and more asset write-downs are a near certainty: "As recent announcements show, there’s only so far that cost cutting can go before difficult decisions need to be taken concerning the long term viability of a mine in a structurally oversupplied market," Mr Emslie adds.
So what led to the collapse in prices? "Australian exports surged ahead by approximately 140 million tonnes (Mt) in 2014 based on investment decisions made several years ago when prices were higher and the long term view was more bullish," says Mr Emslie, "As supply ramped up in 2014, Chinese steel demand did the unthinkable and contracted for the year creating a clear disconnect between supply and demand, marking a decisive turning point for iron ore."
On Chinese imports, which crucially account for 66% of the global total, Mr Emslie says: "2014 finished on a high for Chinese imports (in volume terms not value) with China importing a record 86.9Mt in December." The total value of Chinese imports (in US dollar terms) fell in 2014, despite the volume rising by over 100Mt. Mr Emslie explains; "China’s import bill for iron ore peaked at $112 billion in 2011 (when iron ore prices averaged $168/t) but have subsequently fallen by 16% to $95 billion in 2014. China should see another significant drop in its iron ore import bill in 2015 as significantly lower prices and freight costs more than offset higher volume. We currently forecast a 30Mt rise in Chinese imports of iron ore this year with strong growth in Australian shipments partially offset by price related cutbacks elsewhere."
Pointing to more recent to iron ore news from Australia in January Mr Emslie comments on the impact of sustained oversupply; "The series of announcements and data we've seen provides further evidence of the widening gap between the major miners and the rest of the supply chain. Fourth quarter production reports from Rio Tinto, BHP Billiton and FMG confirm that their low cost expansions are progressing well, paving the way for even higher output in 2015/16." Mr Emslie concludes; "The strong performance of the majors comes at the expense of relatively high cost mid-tier suppliers who are scaling back investment and cutting production in response to low prices and compressed margins."
Iron ore in numbers:
- Iron ore price forecast for Q1 2015 is $67/t CFR.For CY 2015 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Wednesday, 11 March 15
RICHARDS BAY COAL SWAPS DROP $ 3.65 - 4.0/T W-O-W
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 declined month over month and week on week.
The Q2 swap has fell US$ ...
Wednesday, 11 March 15
DRY BULK MARKET CLOSED OFF ON THE GREEN FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The Dry Bulk market closed off on the green for a second week in a row, while the performance of Capesizes hindered a more substantia ...
Wednesday, 11 March 15
MARKET INSIGHT : NEWBUILDINGS - PANOS TSILINGIRIS
From a cost-based, buy-low perspective, there is currently a buying opportunity in the second-hand dry bulk market. I am an anti-cyclical (buy-low) ...
Wednesday, 11 March 15
DRY BULK MARKET: ALL IS NOT LOST FOR A RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The low cost of commodities across the board could trigger an increase of trade among many countries, which in turn could lead to a recovery of the ...
Wednesday, 11 March 15
U.S. ELECTRIC GENERATING COMPANIES TO ADD MORE THAN 20 GW OF GENERATING CAPACITY IN 2015; 16 GW OF GENERATING CAPACITY IS EXPECTED TO RETIRE IN 2015
COALspot.com: In 2015, electric generating companies in U.S. expect to add more than 20 gigawatts (GW) of utility-scale generating capacity to the ...
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- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
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