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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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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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- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Planning Commission, India
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- PTC India Limited - India
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Eastern Coal Council - USA
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
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