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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warned of a 20% fall in Chinese steel consumption over the next 15 years, as Beijing accelerates the shutdown of outdated and loss-making factories.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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Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil pri ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
Wednesday, 07 October 15
U.S. COAL EXPORTS FOR THE FIRST SEVEN MONTHS DOWN 21 PER CENT COMPARED WITH THE SAME PERIOD IN 2014 - EIA
Coal Supply
Lower U.S.’s domestic coal consumption and reduced exports contribute to a forecast decline of 89 million short tons (M ...
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- The State Trading Corporation of India Ltd
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- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
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- Wilmar Investment Holdings
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- Commonwealth Bank - Australia
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- Wood Mackenzie - Singapore
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- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Edison Trading Spa - Italy
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- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
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- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
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- PTC India Limited - India
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- Planning Commission, India
- White Energy Company Limited
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- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
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- Singapore Mercantile Exchange
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- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
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- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
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- Bharathi Cement Corporation - India
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- Independent Power Producers Association of India
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- SMC Global Power, Philippines
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- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
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- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
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- Alfred C Toepfer International GmbH - Germany
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- Global Coal Blending Company Limited - Australia
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- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Australian Coal Association
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- AsiaOL BioFuels Corp., Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
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- Trasteel International SA, Italy
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
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- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
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- Baramulti Group, Indonesia
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- Siam City Cement - Thailand
- Aditya Birla Group - India
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- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
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- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
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- Merrill Lynch Commodities Europe
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