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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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Sunday, 15 February 15
BALTIC DRY INDEX CONTINUALLY DIPPED IN RED
COALspot.com: The Baltic Dry Index continues its decline and fell 5.18 pct to 530 points week on week due to falling commodity prices and declining ...
Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
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- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Planning Commission, India
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
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