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Tuesday, 16 June 20
HIGHER IRON ORE PRICES OFFSET CORONAVIRUS-DRIVEN PRODUCTION RISK - FITCH RATINGS
 Lower iron ore production in Brazil, resulting from rising coronavirus infections, should only marginally affect the cash flow of Vale and other global mining companies due to higher prices, says Fitch Ratings. More than 10% of Vale’s production was affected last week when a local court suspended operations at its Itabira Complex due to employees testing positive for the virus.
Iron ore prices declined earlier this year due to demand concerns but later rebounded and are being supported by supply constraints caused by Vale’s 2019 dam accident and weather-related production disruptions. Prices increased to above USD100/dry metric ton (dmt) due to the news regarding the suspension.
Vale maintained its 2020 production guidance at 310 metric tons (mt) to 330mt with production expected to resume once all employees are tested and the company ensures no infected workers are working at the facilities. CRU Group believes it will be increasingly difficult for Vale to meet volume guidance considering the suspension, weak production in the Northern System and the effect heavy rainfall had on output at the start of 2020. The potential for additional infections increases employee absenteeism and production risk, as the number of people available to work in mines and processing plants falls, and other municipalities could take similar actions to stem the spread of the virus.
Material Environmental, Social and Governance (ESG) shortcomings, particularly in the areas of executing strategy and maintaining the well-being of employees, constrain Vale’s ‘BBB-’ credit ratings with a Stable Outlook. However, Vale is a low-cost producer with a leading market position, abundant reserves, and high-grade iron that commands a market premium, which reduces credit implications.
Fitch projects Vale will generate more than USD14 billion of EBITDA in 2020, assuming iron ore prices average USD75/dmt. FCF should be about USD5.0 billion, assuming capex is about USD4.7 billion and dividends are USD3.0 billion. Vale’s 2020 net debt/EBITDA is projected to be around 0.5x. These forecasts compare with USD17 billion of EBITDA, USD7 billion of FCF and net debt/EBITDA of 0.3x for the LTM ended March 31. Forecasts could prove conservative, given the rise in iron ore prices.
Similar dynamics apply to Anglo American’s operations at Minas-Rio. Fitch used for its rating case the bottom of existing production guidance of 22 million tonnes – 24 million tonnes and a price assumption of USD75/tonne in 2020 for the 62% Fe benchmark cost and freight (CFR) China price. The company has scheduled a one month production stoppage for inspection of its slurry pipeline for second-half 2020. If there were any pandemic-related disruptions in the coming months it might be possible to use the slot to re-schedule the maintenance work. Overall, based on production figures to date, upside from actual prices realized and material Brazilian real depreciation, there is unlikely to be any cash flow downside for the earnings outlook from a temporary disruption, if it occurs at Minas-Rio, to the existing rating case.
CRU’s forecast for benchmark 62% Fe fines CFR China is USD80/dmt as of May 2020. Iron ore demand in China remains robust as rising steel prices and margins for hot rolled coil producers above 10% encourage steel production. CRU expects strong steel production ahead of the wet season in southern China, which typically slows demand from the construction sector. Steel mills in China continue to operate with exceptionally low inventories and recent data shows mill inventories are declining further while port stocks remain steady at 108mt.
Source: Fitch Ratings
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Wednesday, 17 June 20
MARKET INSIGHT - INTERMODAL
After experiencing record earnings during the first half of the year, the focus of headlines concerning the tanker market has shifted from the deve ...
Wednesday, 17 June 20
KOREA SOUTHERN POWER CO INVITED 80000 MT OF LOW CALORIFIC VALUE COAL FOR AUGUST 1H, 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) Min 4,200 kcal/kg - Max. ...
Tuesday, 16 June 20
A GLOBAL ECONOMIC SLUMP: WHAT WILL IT MEAN FOR METALS AND MINING? - WOOD MACKENZIE
Back before coronavirus knocked “normal” out cold, the key issues for miners were sub-investment prices, rising requirements for ESG an ...
Tuesday, 16 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.58 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.43 points Monday, up 0.58 percent week on week.
The index, released by China ...
Tuesday, 16 June 20
SHALE SHOCKED - WOOD MACKENZIE
Capturing shut-ins in real time
Oil markets are searching for balance as the world reflects on the impact of the COVID-19 pandemic. ...
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- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Parliament of New Zealand
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Minerals Council of Australia
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Uttam Galva Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Indo Tambangraya Megah - Indonesia
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
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