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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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Thursday, 26 February 15
DRY BULK MARKET LOOKING FOR POSITIVE MOMENTUM, BUT PROSPECTS REMAIN DIM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the Baltic Dry Index (BDI) inched a bit higher over the past couple of sessions and the Chinese are returning to the market after a week long hi ...
Wednesday, 25 February 15
PORT OF NEWCASTLE SHIPPED 13.16MT OF COAL IN JANUARY; DECLINED 16.70% FROM A MONTH AGO
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.15 billio ...
Wednesday, 25 February 15
BDI SLIPPING ONCE MORE TO FRESH HISTORICAL LOWS
COALspot.com: With the BDI slipping once more to fresh historical lows and the Chinese holidays underway, signs for a positive reversal in the Dry ...
Tuesday, 24 February 15
FOB INDONESIA COAL SWAP SET TO RALLY
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap increased US$ 3.30 (+7.30%) ...
Tuesday, 24 February 15
Q3' FOB RICHARDS BAY COAL SWAP CLOSED $59.80 W/E 20 FEB
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and decline week on week.
The Q2 swap has soar ...
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- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- The University of Queensland
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Australian Coal Association
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- London Commodity Brokers - England
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
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