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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Tuesday, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
Monday, 09 February 15
Q2' CFR SOUTH CHINA COAL SWAP DECLINED 3.28% TO $ 56.92 W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 1.93 (-3.28%) per MT month over month and US$ 0.10 (-0 ...
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- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Australian Coal Association
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Planning Commission, India
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Lanco Infratech Ltd - India
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