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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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Friday, 30 January 15
CAN BULKER CONVERSIONS SPOIL THE TANKER MARKET'S PARTY? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Oversupply of tonnage has always been in the back of the head of ship owners when it comes to taking advantage of favorable market conditions. As s ...
Thursday, 29 January 15
CHINA ENERGY DEMAND MUST BE REVIEWED DUE TO FUNDAMENTAL ECONOMIC CHANGES - WOOD MACKENZIE
New patterns emerging as energy demand growth decoupled significantly from GDP growth for the first time in 2014
Wood Mackenzie says 2014 was ...
Thursday, 29 January 15
CAPE MARKET IS STILL STRUGGLING WITH LOW DEMAND AND LOW COMMODITY PRICES
Handy
Supramax rates are heading south with slipping rates all across the block. USG activity is slow with mid-week levels in the mid 8.000s, Fea ...
Wednesday, 28 January 15
MARKET INSIGHT - STELIOS KOLLINTZAS
With most traders having returned to action from year end festivities, we have already seen signs of activity in the specialized product markets. L ...
Wednesday, 28 January 15
CAPES CONTINUED THEIR UPWARD MOVEMENT LAST WEEK - INTERMODAL
COALspot.com: The Dry Bulk market displayed a mirror performance of that of the week prior, with the Capesize market correcting further upwards and ...
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- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- White Energy Company Limited
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Planning Commission, India
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
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