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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Antam Resourcindo - Indonesia
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Agrawal Coal Company - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Sakthi Sugars Limited - India
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
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