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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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Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
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- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
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