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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, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
Tuesday, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
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- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- MS Steel International - UAE
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Minerals Council of Australia
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
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