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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, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
Wednesday, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
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- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Australian Coal Association
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
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