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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, 15 February 15
BALTIC DRY INDEX CONTINUALLY DIPPED IN RED
COALspot.com: The Baltic Dry Index continues its decline and fell 5.18 pct to 530 points week on week due to falling commodity prices and declining ...
Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
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- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Planning Commission, India
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Parliament of New Zealand
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Independent Power Producers Association of India
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
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