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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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Wednesday, 04 February 15
MARKET INSIGHT - LINOS KOGEVINAS
It has been just about over 2 months since, in a move that surprised many and caused widespread apprehension, OPEC decided to maintain its producti ...
Tuesday, 03 February 15
Q1'15 FOB INDONESIA COAL SWAP CLOSED $ 3.29 HIGHER COMPARED TO Q4'15 DELIVERY PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 rose week over week and month on month.
The Q1 swap up US$ 0.68 (+1.41%) month o ...
Tuesday, 03 February 15
FOB NEWCASTLE COAL SWAP FOR Q4 DELIVERY CLOSED 5.86% LOWER THAN Q1 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery rose US$ 0.26 per MT (+0.51%) week over week and declined US$ 0.02 (-0.04%) ...
Monday, 02 February 15
API 4 FOB RICHARDS BAY COAL SWAP ROSE WEEK OVER WEEK
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q1' 2015 declined month over month and day on day.
The Q1 swap has decli ...
Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
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- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Latin American Coal - Colombia
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Wood Mackenzie - Singapore
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- PTC India Limited - India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Planning Commission, India
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- MS Steel International - UAE
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
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