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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 $70/t CFR (basis 62% Fe sinter fines)
- Global iron ore production 2201 million tonnes (2014)
- Global imports 1404 million tonnes (2014)
- Chinese imports 930 million tonnes (2014)
About Wood Mackenzie
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Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
Friday, 30 January 15
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED 65.7 MMST
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.9 million short tons (mmst) of coal ...
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- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- White Energy Company Limited
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Mercuria Energy - Indonesia
- Planning Commission, India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Marubeni Corporation - India
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