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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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Thursday, 01 January 15
FOB RICHARDS BAY COAL SWAPS CLOSED AT $63.47 PMT ON 26 DEC, SGX DATA SHOWS
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month and week over week.
The Q1 swap has lost US$ 3.37 (-4. ...
Wednesday, 31 December 14
COASTAL ENERGEN (C&O) COMMENCES 1ST UNIT OF 1200 MW POWER PLANT IN INDIA
COALspot.com: Coastal Energen, part of the Coal & Oil Group, announced last week the commissioning and commencement of power production at the ...
Wednesday, 31 December 14
SUB-BIT INDONESIA COAL Q2' 15 DELIVERY SWAP CLOSED 1.03% LOWER COMPARED TO AVERAGE Q1' 15 DELIVERY PRICE - SGX
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week.
The Q1 swap has lost US$ 1.35 (-2 ...
Tuesday, 30 December 14
SHIP PRICES KEEP ON FALLING, SALES COME EARLY FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Ship prices keep on falling on the back of low freight rates. According to the latest report from shipbroker Allied Shipbroking, January sales seem ...
Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
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- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Minerals Council of Australia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Petron Corporation, Philippines
- Aditya Birla Group - India
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- The University of Queensland
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
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