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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Thursday, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Australian Coal Association
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Jaiprakash Power Ventures ltd
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Ministry of Mines - Canada
- Minerals Council of Australia
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
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