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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, 11 January 15
BDI DECLINED 8% ON WEEK; BCI LOST 31%
COALspot.com: The BDI continued its decline in the first week of this year or lost 8 pct week over week. The BDI was closed at 709 points whi ...
Friday, 09 January 15
U.S. EASTERN SPOT STEAM COAL PRICES FELL IN 2014; ROSE IN WEST - EIA
U.S. Eastern spot steam coal prices declined in 2014 compared to 2013 levels because of a decline in steam coal exports.
According to U.S. Ene ...
Friday, 09 January 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 2.2% Y-O-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG
The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move ...
Wednesday, 07 January 15
FUEL EFFICIENT SHIPS MAKE LESS SENSE IN LOWER BUNKER PRICE MARKET, BUT FUEL COSTS ARE BOUND TO RISE AGAIN
The shipping industry entered 2015 on mixed emotions, as a relatively buoyant tanker market is met by a rather lackluster dry bulk market. Still, a ...
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- VISA Power Limited - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- The University of Queensland
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Ambuja Cements Ltd - India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
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