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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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Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Indian Energy Exchange, India
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- White Energy Company Limited
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
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