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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
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- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- MS Steel International - UAE
- GMR Energy Limited - India
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement PLC, Thailand
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- White Energy Company Limited
- Aditya Birla Group - India
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
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