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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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Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- Manunggal Multi Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- PTC India Limited - India
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
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