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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Monday, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Energy Development Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Planning Commission, India
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
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