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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Tuesday, 13 January 15
Q2 CFR SOUTH CHINA COAL SWAP DECLINED 8.66% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined by US$ 3.48 (-5.73%) month over month and US$ 2.35 (-3.94%) week ...
Tuesday, 13 January 15
Q1' 2015 RICHARDS BAY COAL SWAP SLIGHTLY HIGHER THAN Q2 & Q4 2015 SWAPS
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 7.21 ...
Monday, 12 January 15
COAL: LOW PRICES ARE EXPECTED TO DRIVE A SUPPLY-DRIVEN RECOVERY IN THE MEDIUM TERM - SGX
COALspot.com: Thermal coal prices dropped to six-year lows in 2014 driven by persistent oversupply, SGX says in its “ Commodities 2014 - A ye ...
Monday, 12 January 15
FREIGHT MARKET: 2015 FLEET SUPPLY GROWTH IS EXPECTED TO REMAIN SLIGHTLY AHEAD OF CARGO GROWTH - SGX
COALspot.com: The dry bulk freight market was forced to digest a number of negatives in 2014 leading the Baltic Dry Index to fall 66% through the y ...
Monday, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election ...
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- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
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