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