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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
Wood Mackenzie is a global leader in commercial intelligence for the energy, metals and mining industries. We provide objective analysis and advice on assets, companies and markets, giving clients the insights they need to make better strategic decisions.
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Sunday, 08 February 15
BDI FELL CONTINUOUSLY HIT A THREE DECADES LOW
COALspot.com: This week Baltic Exchange Dry Freight Index (BDI) fell continuously hit a three decades low.
The BDI continuously fell and was d ...
Friday, 06 February 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 1.1% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 20.1 million short tons (mmst) of coal ...
Friday, 06 February 15
SHIP DAMAGED BY FIRE CAUSED BY PIRATES FOUND TO BE CONSTRUCTIVE TOTAL LOSS - TAYLOR WESSING
KNOWLEDGE TO ELEVATE
The High Court was asked to determine a number of preliminary issues, including whether a vessel was a constructive total ...
Thursday, 05 February 15
BDI HAS NOW FALLEN A LEVEL CLOSE TO THE INDEX'S HISTORIC LOW - INTERMODAL
They say a picture is worth a thousand words and in this instance just one look at the tables above is enough to understand the great pressure the ...
Thursday, 05 February 15
ULTRAMAX LEVELS FROM INDIA TO CHINA IN THE MID US$ 5000'S - FEARNLEYS AS
Handy
Despite the overall weak sentiment, there is a scent of optimism in the Atlantic market for ppt dates. Continent is still struggling with o ...
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- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- White Energy Company Limited
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Ministry of Mines - Canada
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