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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Wednesday, 14 January 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In Oil we trust! The Barrel price has declined by almost a third in comparison to the 2014 January and has being on the downhill since early last s ...
Wednesday, 14 January 15
COMMODITIES AREN'T PRIMED FOR A REBOUND DURING 2015: SHIPPING COULD BENEFIT FROM LOWER PRICES - ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In the recent past, higher commodity prices were driven by an increase in demand from developing countries, which spelled good news for ship owners ...
Wednesday, 14 January 15
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1 DELIVERY CLOSED AT US$ 46.97 PMT
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week.
The Q1 swap has fell US$ 1.53 (-3.15 ...
Wednesday, 14 January 15
Q4' 15 FOB NEWCASTLE COAL SWAP CLOSED 4.51% LOWER COMPARED TO Q1' 15 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.56 per MT (-3.0%) month over month and US$ 1.03 (-2.0%) week ove ...
Tuesday, 13 January 15
MORE PITFALLS FOR OWNERS LOOKING TO TERMINATE FOR UNPAID HIRE - INCE & CO
KNOWLEDGE TO ELEVATE
It is a debatable point whether or not the obligation to pay hire under a time charter is a condition of the contract or ...
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- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
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- Vijayanagar Sugar Pvt Ltd - India
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- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
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- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
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- Kumho Petrochemical, South Korea
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- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
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- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
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- Central Electricity Authority - India
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- Essar Steel Hazira Ltd - India
- The University of Queensland
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- ASAPP Information Group - India
- Malabar Cements Ltd - India
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
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- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
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- Chamber of Mines of South Africa
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- Indian Energy Exchange, India
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- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
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- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
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- Sindya Power Generating Company Private Ltd
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- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
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- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
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- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Antam Resourcindo - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Gujarat Sidhee Cement - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
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- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
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