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Daily Summary of Baltic Exchange Dry Indices
Baltic Exchange |
Dry |
Index |
BDI |
838 ( UP 1) |
Baltic Exchange |
Capesize |
Index |
BCI |
1604 ( DOWN 1) |
Baltic Exchange |
Panamax |
Index |
BPI |
736 ( DOWN 4) |
Baltic Exchange |
Supramax |
Index |
BSI |
728 ( DOWN 2) |
Baltic Exchange |
Handysize |
Index |
BHSI |
474 ( UP 4) |
Global Coal prices may remain low if Chinese coal production rises: Barclays
Coal prices are likely to remain low, both in China and globally if the production of coal in China rises. The outlook for Chinese coal production is also looking bullish, with the potential for
incremental supply looming once smaller mines are allowed to resume production in Shanxi Province after the National Peoples Congress is concluded in March, according to a Barclays report.
Prices are very hard to be bullish,particularly when the market falls given such highly supportive seasonal demand drivers, the report added.
Despite the freezing weather that is buoying the natural gas market, global coal prices continue to tumble as the buy side is not strong enough for the offers. CIF ARA has fallen to $86.95/t, down 1% w/w, while the front FOB Richards Bay (South African) contract saw prices fall to $86.9/t. As a result, the prompt CIF ARA – FOB RB spreads remained negative, but barely negative, which points to weakness in both basins as prices drift against the background of supportive weather.
With prices starting to head to levels at which US and Russian coal struggles to sell into Europe (or anywhere else), the outlook for producers’ margins remains poor for this year.
Buying interest over the past few years has been from Asia, and it has been for low-CV coal. This week, Chinese buyers have been reported (Platts) as showing increased interest for Indonesian 3800 kcal/kg, with FOB Kalimantan prices being quoted at $37-39/t, or about $61-63/t when adjusted for the energy content.
The demand for higher-quality CV remains low; thus, the higher-quality benchmarks have seen their prices continuing to be squeezed. The lack of demand is somewhat surprising given the weather trends, but this may be due to much better priced domestic Chinese coal, which is helping to limit the opportunities for arbitrage with sea-borne coal.
Source: Barclay's
Indonesian Coal Swaps Gain a Second Day; China Prices Unchanged
Swaps prices advanced a second day for thermal coal from Indonesia, the world’s largest exporter of the fuel, according to Ginga Petroleum Singapore Pte.
The swap for Indonesian sub-bituminous coal with a calorific value of 4,900 kilocalories a kilogram in the second quarter gained 25 cents to $65.50 a metric ton on a net-as- received basis on Jan. 18, Ginga said in an e-mail today. The February contract increased 50 cents to $64.50 a ton.
Contracts for coal with a heating value of 5,500 kilocalories a kilogram for shipment to South China in the second quarter held at $87.10 a ton on a net-as-received basis, the energy broker said. The February contract was unchanged at $85.90 a ton.
A commodity swap is a financial agreement whereby a floating price is exchanged for a fixed rate over a specified contract period. About 60 percent of Indonesia’s coal is classified as sub-bituminous. Higher moisture levels and a lower carbon content reduce the heating value compared with better- quality stock. Sub-bit coal has fewer than 6,100 kilocalories per kilogram, according to the Indonesian energy ministry.
Source: Bloomberg
China's 2013 iron ore imports to see slower growth on economic slowdown
China's iron ore imports are expected to grow by only 25 million-50 million mt this year on projected slower growth in the economy as well as steel output, speakers at an industry conference in Beijing said over the weekend.
"This year Chinese steel production is likely to remain at around the same level as 2012, while domestic iron ore concentrate output may decrease by about 20 million mt," Yang Jiasheng, secretary general of the China Metallurgical Mining Enterprises Association, said Saturday.
"The gap will be filled with imported iron ore, with volumes of the latter to grow by 3.5% or 25 million mt," he said at the 6th Iron Ore Market Demand-Supply Forum.
The iron content in raw ore produced in China has been declining, and this is leading to lower production of concentrates despite higher output volumes of crude ore, Yang explained.
Wang Lan, deputy manager of the Shanghai Shipping Exchange's information department, said he expected China's imports of iron ore to grow by 50 million mt or 7.5% this year to reach 800 million mt.
"China's steel output will still see a small increase in 2013, which will mean the country's iron ore imports will maintain approximately the same rate of growth as in 2012," she said.
China imported 744 million mt of iron ore last year, according to Chinese customs data, an increase of 8.4% from 2011.
China's National Bureau of Statistics announced last Friday that the country produced 716.54 million mt of raw steel in 2012, up 3.1% from 2011.
Source: Platts
Mozambican government wants to analyse Rio Tinto’s coal production figures
The Mozambican government plans to review the technical information of the Rio Tinto mining group, which announced a drop in the amount of coking coal it mines in Mozambique, explaining this was due to transport constraints, the deputy Mining Resources minister said in Maputo.
“We hope they can show us technical data about these findings for us to carry out our own checks,” the deputy Mining Resources minister, Abdul Razak told Portuguese news agency Lusa in relation to Rio Tinto’s announcement about coal production in Mozambique.
The group announced last week that its financial statement contained a write down of US$3 billion related to its Mozambique project and that coal mining would be at lower levels than initially projected due to a lack of transport capacity in the country.
Razak gave assurances that, “the Mozambican government is working with companies so that transport capacity will increase in the short and medium term,” but noted that Rio Tinto’s assessments were, “a normal situation in geology, where this happens a lot.”
“Of course there is no immediate solution, but, in the future, not in the medium term, there will be solutions for carrying coal and other products, on the Sena line and Nacala line, as well as on other railroads that are due to be built,” said Razak.
The company announced a drop in the book value of assets of US$14 billion, which were related to Mozambique and to Canadian aluminium group Alcan, which was acquired in 2007.
In a statement the Mozambican subsidiary of Rio Tinto, which in 2011 took on a majority stake in Riversdale Mining, the previous owner of the Benga coal mining project, announced it was working with the Mozambican government to find alternatives, after its initial idea of transporting the coal along the Zambezi River was not approved.
Source: Macau Hub
S.Africa replaces India as China's No 3 iron ore supplier
South Africa overtook India to become China's third-biggest iron ore supplier in 2012, while Australia strengthened its dominant position as the major supplier to the world's biggest iron ore consuming nation, data from customs showed on Monday.
South Africa provided 40.6 million tonnes over the year, up 12 percent compared to 2011, while Indian imports declined 54.74 percent to 33 million tonnes.
Indian authorities have been cracking down on chaotic and illegal iron ore production, with the state of Goa - one of the country's biggest suppliers - imposing a blanket ban on all mining activities last October.
Supplies from India amounted to 10.6 percent of China's total imports in 2011, but were already disrupted by a mining ban in Karnataka, India's biggest iron ore producing state.
India's share of total imports into China has been in steady decline for several years, falling from 23 percent in 2006 to just 4.4 percent last year.
The biggest beneficiary of the Indian supply crunch has been Australia, China's top supplier by far. It delivered 351.5 million tonnes, or 47 percent of China's total imports over the year, up from 43 percent in 2011, and its dominance is likely to increase further in 2013.
"This year should be the year of Australia taking an increasing market share on the global iron ore market," said Graeme Train, commodities analyst with Macquarie in Shanghai.
"Brazil is not going to see any growth with Vale (VALE5.SA) guiding for negative volumes - the vast majority of growth on the seaborne market is coming from Australia."
Australia's position in China is also likely to be strengthened if the European iron and steel sector starts to recover this year, allowing the likes of South Africa and Finland to divert deliveries back to their traditional markets.
India's ranking has plunged throughout the second half of the year, with monthly shipments eventually falling behind the likes of Mauritania, North Korea and Finland to come in at 20th place in December.
Supplies from India are not expected to recover in the near term, and are unlikely to reach previous high levels, said Train.
"I think India can recover to some extent - they are going through a process of cleaning up illegal operations and eventually it will get back on line, but it will be at severely reduced volumes relative to where they were historically."
China imported a record of 743.6 million tonnes of iron ore in 2012, up 8.4 percent on the year.
Source: Reuters
Merger ‘will not affect’ Eskom coal demand
A merger between commodity trader Glencore and mining company Xstrata will have little bearing on Eskom’s increasing demand for coal and other issues affecting coal supplies and prices, said the Competition Commission’s Thembinkosi Bonakele.
Instead, specific trends identified during the investigations into the largest mining merger in years were set to continue — with or without the merger going ahead, he told the Competition Tribunal on Friday.
These issues included Eskom’s growing demand for coal to supply its power stations, an increase in the export of coal used for electricity generation, especially to India, and the expiry of Eskom’s long-term coal contracts with coal mines.
Explaining to the tribunal why the commission decided to recommend the conditional approval of the transaction, Mr Bonakele said the issues had to be addressed at policy level and the commission had already engaged with the government departments responsible for policy in this area, including the Department of Public Enterprises.
On Friday the tribunal concluded its public hearing into the $33bn merger after Eskom and the National Union of Metalworkers withdrew their intervention applications following a confidential agreement between Eskom and Glencore. Eskom applied to intervene because of concerns of possible coal supply shortages, a reduction in the quality of coal supplied by the merging parties and a rise in the export of coal which would possibly cause domestic coal prices to increase.
Evidence by Eskom executive Kiren Maharaj showed that three power stations — Hendrina, Komati and Majuba — received coal from both Glencore and Xstrata. But she conceded during cross-examination by counsel for the intervening parties, David Unterhalter SC, that Eskom had secured long-term contracts and that it did have alternative suppliers in the eMalahleni area.
She raised concerns about future supplies in Mpumalanga and said Eskom had to look to Waterberg for additional supplies, although coal from Waterberg was not a "direct match" to the needs of the three power stations.
Tribunal chairman Norman Manoim said a decision would be announced in due course.
Source: Business Day Live
MMG Shuts Zinc Shipping, Restricts Processing on Bad Weather
MMG Ltd. (1208), the publicly traded unit of China’s biggest metals trader, has put on hold shipping of zinc concentrate from the world’s second-biggest zinc mine because of bad weather in Australia’s Queensland state.
MMG has also restricted zinc processing at its Century mine, located about 300 kilometers (186 miles) from the port of Karumba, Melbourne-based spokeswoman Kathleen Kawecki said by phone. A tropical low with gusts of up to 85 kilometers an hour will most likely cross the coast between Aurukun and Kowanyama tonight, Australia’s Bureau of Meteorology said today on its website.
Century has a production capacity of 500,000 metric tons annually, making it the world’s second-biggest zinc mine. Cyclone season in Australia lasts from November to April and can disrupt iron ore operations in Australia’s north-west. Cyclones also form over the nation’s north-east, where zinc, copper and coal mines are located.
MMG’s state-owned parent, China Minmetals Corp., trades non-ferrous metals as well as bulk commodities iron ore and coal.
Source: Bloomberg
In unprecedented move Asean iron and steel associations seek review of FTA with China
In an unprecedented move, six regional iron and steel associations have joined forces seeking for a review in the Asean-China Free Trade Agreement (FTA) following the dramatic influx of steel products from China into Asean especially over the past three years, said Asean Iron and Steel Council (AISC) president Chow Chong Long.
The six regional associations Malaysia Iron and Steel Industry Federation (Misif), The Indonesian Iron and Steel Industry Association, Philippines Iron and Steel Institute, Singapore Iron and Steel Group, Iron and Steel Institute of Thailand and Vietnam Steel Association, which are members of AISC have jointly submitted their proposal to the Asean Secretariat in Jakarta last month to take up the matter with China.
At the same time, each of the iron and steel association presidents will bring up his concerns and issues to his respective governments and some were in the midst of taking more trade actions against China steel products.
Since the implementation of the Asean-China FTA in January 2010, Chow pointed out, export of steel products from China to Asean had surged significantly and “such imports to a great extent are competing directly with similar steel products produced in the region”.
In light of the situation, he told StarBiz that it would appear that the Asean-China FTA so far had benefitted only China and not Asean.
Of particular concern among regional steel makers was the significant increase in export volume of steel products from China to Asean, totalling 9.1 million tonnes in the first nine months of 2012, up 47.3% from the corresponding period in 2011, he added.
“The share of steel products from China to total Asean steel imports has increased significantly from a mere 10% in 2009 to 17% in 2010, 18% in 2011 and 23% first half of 2012,” Chow said.
Asean is a significant net importer of steel products as the region is not self-sufficient in the supply of semi-finished steel and high-end steel products.
Unlike Japan and South Korea which export mainly high-end steel products not produced by Asean players, he said China's steel exports were mainly commercial grades which were in direct competition with steel products manufactured in Asean.
Steel consumption in the six Asean nations has been growing in tandem with the increasing pace of economic development in the region.
Chow said apparent steel consumption increased to 52.4 million tonnes in 2011 from 48.6 million tonnes in 2010. Despite the less-than-favourable global steel market situation last year, steel consumption in the six countries totalled 27.5 million tonnes in the first half of 2012, an increase of 4% year-on-year.
Asean steel players also claim that steel exporters from China often manipulate the loopholes in China's steel export tax and rebate structure to maximise their export market penetration resulting in the dumping of cheap China steel products in Asean.
According to Chow, the huge influx of steel exports from China has also resulted in many Asean steel producers cutting down their productions and thus causing serious injury to the steel industries in the region. The situation has led to several affected Asean nations having to adopt trade measures to protect their domestic steel industries.
Source: The Star
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