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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Australian Coal Association
- Xindia Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- White Energy Company Limited
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- The University of Queensland
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
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