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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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Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
Wednesday, 28 January 15
CAPES CONTINUED THEIR UPWARD MOVEMENT LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market displayed a mirror performance of that of the week prior, with the Capesize market correcting further upwards and ...
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- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Anglo American - United Kingdom
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Merrill Lynch Commodities Europe
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Siam City Cement - Thailand
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