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Wednesday, 04 November 15
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
 Four companies dominate global iron ore production, namely; BHP Billiton, Vale, Rio Tinto, and Fortescue Metals Group. Together these companies control more than 70 percent of the seaborne iron ore market.
The price of iron ore edged to $US49.95/ ton on Wednesday, nearing a four-month low but still the two major producers in Australia and Brazil have been following through with their longstanding plans to increase production. The low iron ore price also comes as China’s official forecaster warned of a 20% fall in Chinese steel consumption over the next 15 years, as Beijing accelerates the shutdown of outdated and loss-making factories.
Rio Tinto in Australia and Vale in Brazil, are still ramping up production. For the first nine-months of 2015, Vale’s production overall is around 8 million metric tons higher than Rio Tinto’s at 248 million metric tons, while Vale’s shipments are just over 3 million metric tons higher.
Of course Australian miners still have an advantage in delivered costs to China, the main importer for iron ore. For example, Capesizes hauling the commodity from Brazil to China last week saw rates around $12/ton for the Tubarao/Qingdao route, while from Rio Tinto’s Dampier terminal in Western Australian, freight rates were slightly in excess of $5.10/ton.
It is quite interesting to see that current iron ore prices aren’t worrying Rio Tinto. Their CEO, Andrew Harding, said he’s not losing sleep, because the business line, like the miner itself, is in for the long haul. He reasons that populations will continue to grow and develop, especially in Asia and iron ore will be needed to serve their needs. In September, Rio Tinto said its modelling showed that the world would need three billion tons of iron ore by 2030.
On the other side of the world, Vale is also quite confident in their iron ore division after releasing their third quarter results for 2015. Their highlight is the significant cost cutting during this period, which made Vale, the company with the lowest production cost/ton in the entire sector, reach an unprecedented cost level of $ 12.7/ton of iron ore. They are trailing faster growth compared to Australian majors, who this year posted stronger increases to volumes from new capacity ramp-ups.
This is an oversupplied market that is obviously affected by the shrinking Chinese steel demand. On the other hand, oversupplied ore trade also creates opportunities for the large players, since it means that certain high-cost producers will struggle to survive. Some iron ore mines, such as those in Canada, China and Africa, have already buckled under the pressure.
Nevertheless, producers with operating costs that are far below current iron ore prices are very well-positioned to take market share in the long term. Now if several high-cost producers exit the industry, it would be quite difficult for them to re-commence operations.
Over the long term, the low-cost iron mines could potentially fill the gap that remains after smaller companies exit the market. The gain in market share will likely increase margins, operating cash flow and profits. Hopefully this could also change the dynamics in the market and positively affect the demand for seaborne trade.
By Christopher Thomas Whitty
Marketing Manager, Towage & Port Agency
Cotzias Intermodal Shipping
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 25 November 15
INDIA'S POWER GENERATORS FACE LOW, FALLING UTILISATION RATE - FITCH
COAlspot.com: Fitch Ratings says in a new report that the utilisation rate of India's thermal power generation capacity continued to decline in ...
Wednesday, 25 November 15
BIG CHINESE COPPER PROCESSORS DEFEND MARGINS THROUGH R&D, SAYS FITCH
Large Chinese copper processors are focusing on higher value-added products and investing in R&D to enhance their technical know-how to maintai ...
Wednesday, 25 November 15
BIMCO LAUNCHES ANTI-CORRUPTION CLAUSE FOR SHIPPING CONTRACTS WORLDWIDE
COALspot.com: BIMCO, is the world’s largest international shipping association, with 2,200 members in around 130 countries, has now launched ...
Wednesday, 25 November 15
TANKER MARKET INSIGHT - GEORGE VASTARDIS
We have already noticed obvious signs of activity mainly West of Suez, which are currently driving the clean MR market to higher levels. Over the p ...
Tuesday, 24 November 15
COAL SUPPLY PRESSURE PUTS INDONESIAN HBA IN FREE FALL
The coal industry is slowly recognizing that, the current coal price level is not a decrease in price, but a change in pricing to corresp ...
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- Ministry of Mines - Canada
- SMC Global Power, Philippines
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- Africa Commodities Group - South Africa
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- Indian Energy Exchange, India
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- Krishnapatnam Port Company Ltd. - India
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- Star Paper Mills Limited - India
- Wilmar Investment Holdings
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- Savvy Resources Ltd - HongKong
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- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
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- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
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- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Australian Coal Association
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
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- Eastern Energy - Thailand
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- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
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- Energy Link Ltd, New Zealand
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- Bulk Trading Sa - Switzerland
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- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
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- Anglo American - United Kingdom
- VISA Power Limited - India
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- Coal and Oil Company - UAE
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- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- The University of Queensland
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
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- The State Trading Corporation of India Ltd
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- Bangladesh Power Developement Board
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- Cigading International Bulk Terminal - Indonesia
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- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
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