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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
Thursday, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
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- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- White Energy Company Limited
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- London Commodity Brokers - England
- Xindia Steels Limited - India
- CNBM International Corporation - China
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Madhucon Powers Ltd - India
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
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