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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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- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Indika Energy - Indonesia
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- The University of Queensland
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Australian Coal Association
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Formosa Plastics Group - Taiwan
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