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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Tuesday, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
Monday, 19 January 15
FOB RICHARDS BAY COAL SWAP FOR Q4 DELIVERY CLOSED 4% LOWER THAN Q1 DELIVERY PRICE
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and week over week.
The Q1 swap has f ...
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- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Parliament of New Zealand
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Tamil Nadu electricity Board
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Xindia Steels Limited - India
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
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