Tuesday, 07 Feb 2012
Dow Jones reported that coking coal prices could correct downward to $200 a metric a ton in 2012, but the caveat is the Australian weather that could determine the supply dynamics in the year ahead.
Mr Gerard McCloskey a consultant and former owner of UK based McCloskey Group told an audience at the Mining Indaba “There will be a correction of prices down to USD 200 per tonne.”
Mr McCloskey added “But it's a great price.”
He noted that the price for coking coal has remained above USD 200 a tonne for six consecutive quarters already.
He noted that the key caveat would be the amount of rain that falls in the Queensland basin in Australia this year. Heavy rainfall could shut down exports from the world's largest seaborne coking coal region as it has done so in the past, most notably last year.
McCloskey said that if Australia were to produce at levels last seen in the first half of 2010 when it was uninterrupted by rain, that's an extra 30 million tonnes coming into a 140 million tonne market.
He told "That's a lot to take, which could result in weaker prices.”
He added that there are already signs of oversupply in the market, with shipments of US coking coal anchored off the coast of China, waiting to be sold.
McCloskey said prices would weaken, but told the audience not to panic because they will still be well above costs.
(Sourced from DJ News)
Showing posts with label Market analyst. Show all posts
Showing posts with label Market analyst. Show all posts
Tuesday, February 7, 2012
Zyl finds buyer interest in Mbila coking coal output
Tuesday, 07 Feb 2012
Australian mining company Zyl, which last year attracted takeover interest said six companies have approached it about securing more than 600,000 tonnes a year of coking coal from its planned Mbila mine in South Africa.
Zyl said that the expressions of interest, including one from an unnamed international mining company, cover the full production expected by the company in the first phase of the mine’s development.
The Perth-based company said it was seeking to formalise the interest and would update the market in due course.
Zyl has previously said it expects to begin production at the mine, located in KwaZulu-Natal province, in the second quarter of 2013, and to reach full production of 840,000 tonnes a year by the second quarter of 2014. It has estimated Mbila has resources of almost 125 million tonnes, not including land where the company holds a prospecting right.
Zyl in December 2011 appointed Macquarie Capital as an adviser after it was approached by two unnamed parties interested in either a partnership or takeover.
(soured TheAustralian.com.au)
Australian mining company Zyl, which last year attracted takeover interest said six companies have approached it about securing more than 600,000 tonnes a year of coking coal from its planned Mbila mine in South Africa.
Zyl said that the expressions of interest, including one from an unnamed international mining company, cover the full production expected by the company in the first phase of the mine’s development.
The Perth-based company said it was seeking to formalise the interest and would update the market in due course.
Zyl has previously said it expects to begin production at the mine, located in KwaZulu-Natal province, in the second quarter of 2013, and to reach full production of 840,000 tonnes a year by the second quarter of 2014. It has estimated Mbila has resources of almost 125 million tonnes, not including land where the company holds a prospecting right.
Zyl in December 2011 appointed Macquarie Capital as an adviser after it was approached by two unnamed parties interested in either a partnership or takeover.
(soured TheAustralian.com.au)
Monday, February 6, 2012
China needs more coal
Mon, Feb06, 2012
BEIJING: China should increase coal production and imports and curb exports to ensure ample supplies for power generation, as the country heads for another year of power shortage, the China Electricity Council said.
Coal consumption by power plants will grow some 150 million tonnes in 2012, which requires new coal supplies of more than 300 million tonnes in the domestic market, the council, an association representing power firms, said in a report on its website (www.cec.org.cn).
The government should control the price of coal shipped to power plants, raise electricity prices in a timely manner, approve construction of more coal transport railways and power transmission lines, and deepen power demand management and restructure the economy to help balance the power market, it said.
The council forecast maximum power shortfalls of 30 – 40 gigawatts this year, similar to peak shortfalls of more than 30 GW in 2011.
It estimated that power demand will grow by about 9.5 percent from a year earlier to 5.14 trillion kilowatt hours this year and power generating capacity to increase by 85 GW to 1,140 GW by year-end.
China’s power consumption rose 11.7 percent on year to 4.69 trillion kWh in 2011 and it added about 90 GW of generating capacity.
The country overtook Japan as the world’s top coal importer for the first time ever last year, importing a record 182.4 million tonnes of the black hydrocarbon, dwarfing Japan’s 175.2 million tonnes.
China also exported 14.66 million tonnes of coal last year, mainly to users in Japan, South Korea and Taiwan, Chinese customs data showed.
China is the world’s largest coal producer and consumer, and nearly half its production of more than 3.2 billion tonnes is burned by power plants.
(sourced Dawn.com)
BEIJING: China should increase coal production and imports and curb exports to ensure ample supplies for power generation, as the country heads for another year of power shortage, the China Electricity Council said.
Coal consumption by power plants will grow some 150 million tonnes in 2012, which requires new coal supplies of more than 300 million tonnes in the domestic market, the council, an association representing power firms, said in a report on its website (www.cec.org.cn).
The government should control the price of coal shipped to power plants, raise electricity prices in a timely manner, approve construction of more coal transport railways and power transmission lines, and deepen power demand management and restructure the economy to help balance the power market, it said.
The council forecast maximum power shortfalls of 30 – 40 gigawatts this year, similar to peak shortfalls of more than 30 GW in 2011.
It estimated that power demand will grow by about 9.5 percent from a year earlier to 5.14 trillion kilowatt hours this year and power generating capacity to increase by 85 GW to 1,140 GW by year-end.
China’s power consumption rose 11.7 percent on year to 4.69 trillion kWh in 2011 and it added about 90 GW of generating capacity.
The country overtook Japan as the world’s top coal importer for the first time ever last year, importing a record 182.4 million tonnes of the black hydrocarbon, dwarfing Japan’s 175.2 million tonnes.
China also exported 14.66 million tonnes of coal last year, mainly to users in Japan, South Korea and Taiwan, Chinese customs data showed.
China is the world’s largest coal producer and consumer, and nearly half its production of more than 3.2 billion tonnes is burned by power plants.
(sourced Dawn.com)
Friday, January 27, 2012
Walter Energy may lure buyers willing to bet on a recovery in coal prices
Friday, 27 Jan 2012
Bloomberg reported that Walter Energy Inc may finally lure buyers willing to bet on a recovery in coal prices with the industry's cheapest stock.
According to data compiled by Bloomberg, after losing almost half its value in the past year, the producer of steelmaking coal sold for 9.3 times earnings this week. That was less than any North American coal mining company with USD 1 billion in market capitalization. The slide also drove down the value of Walter Energy to 1.7 times its net assets this month, the lowest since the last bear market in US equities.
While a surge in coal prices last year led to the biggest wave of coal deals, most acquirers were left with losses as demand for the commodity collapsed. Walter Energy, which bought Western Coal Corporation for USD 5.3 billion in April, is an attractive target because it produces high grade steelmaking coal. A buyer could spend double Walter Energy’s closing price of USD 67.54 a share yesterday and still get the company for less relative to earnings than any coal takeover in the past year.
Mr J Christopher Haberlin analyst at Davenport & Co said that "Now is the opportune time for a buyer to potentially start looking at them. It's some of the best coal in the world and it's what steelmakers want. If somebody did make a run at Walter here, certainly they could take Walter out a price much lower than where that valuation may have been."
Walter Energy may attract interest from BHP Billiton Limited, Anglo American Plc or ArcelorMittal, and could command as much as USD 120 a share in an acquisition.
(Sourced from www.bloomberg.net)
Bloomberg reported that Walter Energy Inc may finally lure buyers willing to bet on a recovery in coal prices with the industry's cheapest stock.
According to data compiled by Bloomberg, after losing almost half its value in the past year, the producer of steelmaking coal sold for 9.3 times earnings this week. That was less than any North American coal mining company with USD 1 billion in market capitalization. The slide also drove down the value of Walter Energy to 1.7 times its net assets this month, the lowest since the last bear market in US equities.
While a surge in coal prices last year led to the biggest wave of coal deals, most acquirers were left with losses as demand for the commodity collapsed. Walter Energy, which bought Western Coal Corporation for USD 5.3 billion in April, is an attractive target because it produces high grade steelmaking coal. A buyer could spend double Walter Energy’s closing price of USD 67.54 a share yesterday and still get the company for less relative to earnings than any coal takeover in the past year.
Mr J Christopher Haberlin analyst at Davenport & Co said that "Now is the opportune time for a buyer to potentially start looking at them. It's some of the best coal in the world and it's what steelmakers want. If somebody did make a run at Walter here, certainly they could take Walter out a price much lower than where that valuation may have been."
Walter Energy may attract interest from BHP Billiton Limited, Anglo American Plc or ArcelorMittal, and could command as much as USD 120 a share in an acquisition.
(Sourced from www.bloomberg.net)
Thursday, January 5, 2012
Europe bond auctions crucial test for euro crisis
Jan05, 2012,
Lackluster sale of German government debt offers little relief
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A less-than-thrilling uptake of German government debt on Wednesday put a drag on the euro, kicking off a major theme for the shared currency and other financial markets as Europe’s debt crisis drags into 2012.
Germany sold 4.1 billion euros ($5.3 billion) of 10-year government bonds. The auction, which had aimed to sell up to €5 billion euros of supply, attracted bids totaling €5.3 billion. The Bundesbank, as is standard practice, retained around €900 million of bonds on behalf of Germany’s public debt agency.
“Although today’s auction was an improvement ... it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets as the region faces a massive wave of refinancing over the next few months amid continuing turmoil in its peripheral economies,” said Boris Schlossberg, director of currency research at GFT.
Bids exceeded supply 1.3 times. The yield declined from an already low 1.98% in a November auction to 1.93%.
Technically, November’s auction had been under-subscribed — an outcome that further rattled already panicked European markets as investors feared the debt crisis was beginning to take a toll on the currency’s sturdiest country.
The sale opens a heavy round of funding by European sovereigns in the first quarter, including sales by Spain, the euro-zone’s fourth-largest economy, and Italy, its third largest.
Analysts at RBC Capital Markets last month estimated a total of €220 billion to €230 billion of European government bond supply to be issued in the first quarter alone.
France, which faces worries over the standing of its triple-A rating, is set to issue government bonds on Thursday, while Spain and Italy will tap the market for the first time in 2012 next week.
Read complete article at MarketWatch
Lackluster sale of German government debt offers little relief
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A less-than-thrilling uptake of German government debt on Wednesday put a drag on the euro, kicking off a major theme for the shared currency and other financial markets as Europe’s debt crisis drags into 2012.
Germany sold 4.1 billion euros ($5.3 billion) of 10-year government bonds. The auction, which had aimed to sell up to €5 billion euros of supply, attracted bids totaling €5.3 billion. The Bundesbank, as is standard practice, retained around €900 million of bonds on behalf of Germany’s public debt agency.
“Although today’s auction was an improvement ... it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets as the region faces a massive wave of refinancing over the next few months amid continuing turmoil in its peripheral economies,” said Boris Schlossberg, director of currency research at GFT.
Bids exceeded supply 1.3 times. The yield declined from an already low 1.98% in a November auction to 1.93%.
Technically, November’s auction had been under-subscribed — an outcome that further rattled already panicked European markets as investors feared the debt crisis was beginning to take a toll on the currency’s sturdiest country.
The sale opens a heavy round of funding by European sovereigns in the first quarter, including sales by Spain, the euro-zone’s fourth-largest economy, and Italy, its third largest.
Analysts at RBC Capital Markets last month estimated a total of €220 billion to €230 billion of European government bond supply to be issued in the first quarter alone.
France, which faces worries over the standing of its triple-A rating, is set to issue government bonds on Thursday, while Spain and Italy will tap the market for the first time in 2012 next week.
Read complete article at MarketWatch
South African Coal Exports to India Slump 24% in 11 Months, Mjunction Says
Thursday, 05 January 2012
India’s imports of coal (CCAIIQTL) from South Africa fell in the first 11 months of 2011, while China almost doubled purchases, according to Mjunction Services Ltd.India bought 14.39 million metric tons of the fuel from South Africa, down 24 percent from 18.96 million in the same period a year earlier, India Coal Market Watch, a unit of Mjunction, said in an e-mail dated yesterday. Purchases in November fell 21 percent from the previous year to 1.29 million tons.
South Africa’s shipments to China, the world’s biggest coal consumer, rose 88 percent to 12.26 million tons in the first 11 months of 2011, India Coal said in the note. November sales increased more than threefold to 2.84 million. India’s imports accounted for 25 percent of the 57.4 million tons from South Africa through November last year, according to Bloomberg calculations based on data from Mjunction and the Richards Bay Coal Terminal website. China accounted for 21 percent of the shipments.
Prices (CLSPSARB) at Richards Bay fell to $105.74 a ton as of Dec. 30 from $105.95 a ton a week earlier, according to data from Petersfield, U.K.-based researcher IHS McCloskey.
Kolkata, India-based Mjunction is a joint venture between Tata Steel Ltd. and Steel Authority of India Ltd.
Source: Bloomberg
India’s imports of coal (CCAIIQTL) from South Africa fell in the first 11 months of 2011, while China almost doubled purchases, according to Mjunction Services Ltd.India bought 14.39 million metric tons of the fuel from South Africa, down 24 percent from 18.96 million in the same period a year earlier, India Coal Market Watch, a unit of Mjunction, said in an e-mail dated yesterday. Purchases in November fell 21 percent from the previous year to 1.29 million tons.
South Africa’s shipments to China, the world’s biggest coal consumer, rose 88 percent to 12.26 million tons in the first 11 months of 2011, India Coal said in the note. November sales increased more than threefold to 2.84 million. India’s imports accounted for 25 percent of the 57.4 million tons from South Africa through November last year, according to Bloomberg calculations based on data from Mjunction and the Richards Bay Coal Terminal website. China accounted for 21 percent of the shipments.
Prices (CLSPSARB) at Richards Bay fell to $105.74 a ton as of Dec. 30 from $105.95 a ton a week earlier, according to data from Petersfield, U.K.-based researcher IHS McCloskey.
Kolkata, India-based Mjunction is a joint venture between Tata Steel Ltd. and Steel Authority of India Ltd.
Source: Bloomberg
Friday, December 9, 2011
SA misses coal boom
Fri, Dec9, 2011
London - South Africa's coal exports are surging into 2012 just when top spot buyers China and India are out of the market and supply bottlenecks elsewhere have eased, so it will have to fight for market share, eroding prices in a fundamentally weak landscape.
South Africa has the port capacity to export 81 million tonnes a year of coal from Richards Bay Coal Terminal, but in recent years the tonnage shipped has been far lower at about 64 million tonnes due to rail bottlenecks.
Exports in 2012 are forecast at around 70 million tonnes due to operator Transnet Freight Rail's (TFR's) improved railing rate, exporters and analysts said.
Even if TFR cannot sustain its target 1.6 million tonnes of coal a week moved to Richards Bay, after years of doubt and stinging criticism exporters expect rail rates to rise enough for an extra 7-10 million tonnes of exports.
"I think there's a lot of room for prices to come down - I wouldn't be surprised to see $85.00 a tonne FOB Richards Bay then rebounding back to $105 next year,” said Jaime Correal, analyst at Wood Mackenzie in Annapolis.
Exporters who have enjoyed fat margins on sales at over $100 against cash costs of about $60 are weighing up their likely profits on a higher volume sales at lower prices.
South Africa will export 21 million tonnes of coal in Q4, only slightly less than the 27 million shipped in the first half of the year, following a dramatic performance improvement by rail operator TFR.
Benchmark South African prices FOB Richards Bay have fallen from January’s highs of over $130.00 a tonne to about $100.00, on weakening fundamentals which will bite harder and push prices down in the coming year.
"Isn't it ironic that South Africa gets its act together on railings just as China withdraws from the market?," one major European trader said.
"It's the coal without any visible means of support because it isn't yet pricing in to any market in the world," he said.
This year began with a price spike and supply disruption due to floods in Australia's Queensland state and the Japanese tsunami. Indonesia and Colombia's output was hampered by severe rains and South Africa's exports seemed set for a shockingly low total of under 57 million tonnes.
"Last year almost every exporter had problems - but this year it's the reverse, nobody has a major problem exporting and South Africa is shipping at a totally unexpected rate," one major South African exporter said.
"It's bearish next year and the South African exporters are not in the best position to be trying to increase sales now," said Emmanuel Fages, an analyst with Societe Generale.
But some are unconvinced that TFR can keep up the pace.
"The performance of TFR has really improved lately but it's not clear if it will be sustainable or whether they'll start to have problems again," said Jaime Correal, coal analyst with Wood Mackenzie.
"For this reason and because of strong domestic demand, we expect a slow growth in South African exports to 68 million tonnes maximum next year and slowly beyond that."
Retired drivers save the day
Among numerous TFR initiatives this year, the re-hiring of locomotive drivers had a dramatic impact on productivity, exporter, rail and transport sources said.
"TFR re-employed 26 retired or semi-retired train drivers; their knowledge is very important, they know how to handle a train and can do their own minor repairs," one source said.
These experienced drivers are able to drive new longer trains with many more jumbo wagons over some challenging parts of the line prone to derailments, and can save hours by avoiding the need to send out repair teams.
The move to a scheduled rail service, infra-red inspections of rail track (two potential derailments were averted that way) and raised security to prevent cable theft all played a part.
Rising quantities of American coal bought 1-2 years ago at discount prices are being shipped to Europe, increasing the pressure on South African sellers to shift sales to Asia.
India has been the biggest single buyer of South African coal since 2007, much of it now sold under term contracts but from next year India's biggest trade importers say they will buy spot only and will seek cheaper alternatives where possible.
"There's no doubt that some of the Indian buyers with index-linked term contracts have really suffered and will be more short-term buyers," another major exporter said.
India has been out of the spot market for several months and in the meantime, China absorbed the unwanted tonnes.
China is now the second-largest buyer of South African coal and absorbed about 9.5 million tonnes in January-October, roughly a fifth of the country's exports and a huge increase.
South Korea, which has reverted to buying standard grade coal, is also expected to buy more from South Africa.
"China and India, especially China, are such a huge price influence and the Chinese buyers like South African coal so as long as freight rates remain fairly low, it will still be competitive into China," the second exporter said.
(sourced Reuters)
London - South Africa's coal exports are surging into 2012 just when top spot buyers China and India are out of the market and supply bottlenecks elsewhere have eased, so it will have to fight for market share, eroding prices in a fundamentally weak landscape.
South Africa has the port capacity to export 81 million tonnes a year of coal from Richards Bay Coal Terminal, but in recent years the tonnage shipped has been far lower at about 64 million tonnes due to rail bottlenecks.
Exports in 2012 are forecast at around 70 million tonnes due to operator Transnet Freight Rail's (TFR's) improved railing rate, exporters and analysts said.
Even if TFR cannot sustain its target 1.6 million tonnes of coal a week moved to Richards Bay, after years of doubt and stinging criticism exporters expect rail rates to rise enough for an extra 7-10 million tonnes of exports.
"I think there's a lot of room for prices to come down - I wouldn't be surprised to see $85.00 a tonne FOB Richards Bay then rebounding back to $105 next year,” said Jaime Correal, analyst at Wood Mackenzie in Annapolis.
Exporters who have enjoyed fat margins on sales at over $100 against cash costs of about $60 are weighing up their likely profits on a higher volume sales at lower prices.
South Africa will export 21 million tonnes of coal in Q4, only slightly less than the 27 million shipped in the first half of the year, following a dramatic performance improvement by rail operator TFR.
Benchmark South African prices FOB Richards Bay have fallen from January’s highs of over $130.00 a tonne to about $100.00, on weakening fundamentals which will bite harder and push prices down in the coming year.
"Isn't it ironic that South Africa gets its act together on railings just as China withdraws from the market?," one major European trader said.
"It's the coal without any visible means of support because it isn't yet pricing in to any market in the world," he said.
This year began with a price spike and supply disruption due to floods in Australia's Queensland state and the Japanese tsunami. Indonesia and Colombia's output was hampered by severe rains and South Africa's exports seemed set for a shockingly low total of under 57 million tonnes.
"Last year almost every exporter had problems - but this year it's the reverse, nobody has a major problem exporting and South Africa is shipping at a totally unexpected rate," one major South African exporter said.
"It's bearish next year and the South African exporters are not in the best position to be trying to increase sales now," said Emmanuel Fages, an analyst with Societe Generale.
But some are unconvinced that TFR can keep up the pace.
"The performance of TFR has really improved lately but it's not clear if it will be sustainable or whether they'll start to have problems again," said Jaime Correal, coal analyst with Wood Mackenzie.
"For this reason and because of strong domestic demand, we expect a slow growth in South African exports to 68 million tonnes maximum next year and slowly beyond that."
Retired drivers save the day
Among numerous TFR initiatives this year, the re-hiring of locomotive drivers had a dramatic impact on productivity, exporter, rail and transport sources said.
"TFR re-employed 26 retired or semi-retired train drivers; their knowledge is very important, they know how to handle a train and can do their own minor repairs," one source said.
These experienced drivers are able to drive new longer trains with many more jumbo wagons over some challenging parts of the line prone to derailments, and can save hours by avoiding the need to send out repair teams.
The move to a scheduled rail service, infra-red inspections of rail track (two potential derailments were averted that way) and raised security to prevent cable theft all played a part.
Rising quantities of American coal bought 1-2 years ago at discount prices are being shipped to Europe, increasing the pressure on South African sellers to shift sales to Asia.
India has been the biggest single buyer of South African coal since 2007, much of it now sold under term contracts but from next year India's biggest trade importers say they will buy spot only and will seek cheaper alternatives where possible.
"There's no doubt that some of the Indian buyers with index-linked term contracts have really suffered and will be more short-term buyers," another major exporter said.
India has been out of the spot market for several months and in the meantime, China absorbed the unwanted tonnes.
China is now the second-largest buyer of South African coal and absorbed about 9.5 million tonnes in January-October, roughly a fifth of the country's exports and a huge increase.
South Korea, which has reverted to buying standard grade coal, is also expected to buy more from South Africa.
"China and India, especially China, are such a huge price influence and the Chinese buyers like South African coal so as long as freight rates remain fairly low, it will still be competitive into China," the second exporter said.
(sourced Reuters)
Wednesday, December 7, 2011
Richard Bay coal export prices rise for first week in seven
Wednesday, 07 Dec 2011
Bloomberg reported that coal export prices at South Africa’s Richards Bay, the continent’s biggest terminal for shipping the fuel, rose for the first week in seven.
Bloomberg from researcher IHS McCloskey, prices increased 22 cents, or 0.2% last week to an average USD 102.52 a metric tonne, following a 3.4% decline in the week ended November 25.
The price quoted is on a free on board basis, excluding delivery costs.
(Sourced from Bloomberg.net)
Bloomberg reported that coal export prices at South Africa’s Richards Bay, the continent’s biggest terminal for shipping the fuel, rose for the first week in seven.
Bloomberg from researcher IHS McCloskey, prices increased 22 cents, or 0.2% last week to an average USD 102.52 a metric tonne, following a 3.4% decline in the week ended November 25.
The price quoted is on a free on board basis, excluding delivery costs.
(Sourced from Bloomberg.net)
Wednesday, November 23, 2011
JP Morgan cuts iron ore price forecasts drastically
Wednesday, 23 Nov 2011
Market Watch reported that JPMorgan Chase & Co has trimmed its forecasts for iron ore prices by 10% to 15% for the next five years in response to lower expected demand for the steelmaking commodity.
JP Morgan has cut its average price forecast as under
2011- - By 6% to USD 167.40 a tonne
2012 - By 16% to USD147.50 per tonne
2013 - By 14% to USD 150 per tonne
2014 - By 11% to USD 125 per tonne
2015 - By 13% to USD 105 per tonne
The company said in a research report published Tuesday that “We believe that high cost Chinese production will keep its place in the market and support prices at above normal levels for some time. However, we have lowered our demand projections in line with our global economists' estimates of world growth and this results in lower price forecasts.”
JPMorgan said “The supply side remains supportive and supply disruptions and continued delays in projects by the junior miners make us confident that the iron ore prices are here to stay relatively high for a few years.”
JPMorgan said “Spot prices for the commodity have swung wildly in recent weeks, declining more than 30% over three weeks and then recovering about 26% from the bottom of USD 116.90 per tonne. Going forward, the recovery and the sustainability of iron ore prices will depend on the strength of recovery in demand from Chinese steel mills, a potential recovery in European steel demand and an overall improvement in the general macro-economic sentiment.”
(sourced from marketwatch.com)
Market Watch reported that JPMorgan Chase & Co has trimmed its forecasts for iron ore prices by 10% to 15% for the next five years in response to lower expected demand for the steelmaking commodity.
JP Morgan has cut its average price forecast as under
2011- - By 6% to USD 167.40 a tonne
2012 - By 16% to USD147.50 per tonne
2013 - By 14% to USD 150 per tonne
2014 - By 11% to USD 125 per tonne
2015 - By 13% to USD 105 per tonne
The company said in a research report published Tuesday that “We believe that high cost Chinese production will keep its place in the market and support prices at above normal levels for some time. However, we have lowered our demand projections in line with our global economists' estimates of world growth and this results in lower price forecasts.”
JPMorgan said “The supply side remains supportive and supply disruptions and continued delays in projects by the junior miners make us confident that the iron ore prices are here to stay relatively high for a few years.”
JPMorgan said “Spot prices for the commodity have swung wildly in recent weeks, declining more than 30% over three weeks and then recovering about 26% from the bottom of USD 116.90 per tonne. Going forward, the recovery and the sustainability of iron ore prices will depend on the strength of recovery in demand from Chinese steel mills, a potential recovery in European steel demand and an overall improvement in the general macro-economic sentiment.”
(sourced from marketwatch.com)
Friday, November 18, 2011
Iron ore price to remain volatile - BC Iron
Friday, 18 Nov 2011
BC Iron expects ongoing volatility in the iron ore price, but said that the market will remain healthy.
The spot iron ore price has softened in the past few months, but recently began tracking upwards, BC Iron chairman Tony Kiernan noted at the company's annual general meeting yesterday
Iron ore prices climbed to USD 139 a tonne earlier this week, after hitting a low of USD 115.85 in late October.
Record highs near USD 200 a tonne were reached earlier this year.
He said that "We will get the ups and downs of iron ore pricing in the next three to four years, but in general terms, we would expect a healthy market for the sale of our product.”
(sourced from Herald.com)
BC Iron expects ongoing volatility in the iron ore price, but said that the market will remain healthy.
The spot iron ore price has softened in the past few months, but recently began tracking upwards, BC Iron chairman Tony Kiernan noted at the company's annual general meeting yesterday
Iron ore prices climbed to USD 139 a tonne earlier this week, after hitting a low of USD 115.85 in late October.
Record highs near USD 200 a tonne were reached earlier this year.
He said that "We will get the ups and downs of iron ore pricing in the next three to four years, but in general terms, we would expect a healthy market for the sale of our product.”
(sourced from Herald.com)
Wednesday, November 16, 2011
South African coal export prices fall to lowest in nearly a year
Wednesday, 16 Nov 2011
According to data on Bloomberg from researcher IHS McCloskey, coal export prices at Richards Bay, South Africa, the continent’s biggest terminal for shipping the fuel, fell to the lowest level in almost a year.
Prices decreased USD 1.83, or 1.7% last week to an average USD 106.30 a metric tonne, the least since November 26th 2010, following a 1.2% decline in the week ended November 4. The price quoted is on a free on board basis, excluding delivery costs.
(Sourced from Bloomberg)
According to data on Bloomberg from researcher IHS McCloskey, coal export prices at Richards Bay, South Africa, the continent’s biggest terminal for shipping the fuel, fell to the lowest level in almost a year.
Prices decreased USD 1.83, or 1.7% last week to an average USD 106.30 a metric tonne, the least since November 26th 2010, following a 1.2% decline in the week ended November 4. The price quoted is on a free on board basis, excluding delivery costs.
(Sourced from Bloomberg)
Monday, November 14, 2011
Supply disruptions in Colombia and Australia may boost coal prices - Barclays Capital
Sunday, 13 Nov 2011
Barclays Capital said that potential disruptions to Colombian and Australian supply could offer some support to coal prices in the final quarter of the year.
Analyst Miswin Mahesh in a note said that “Colombian supplies could be at risk, given that seasonally it is going through the wettest months of the year and there are expectations of a stronger-than-normal rainy season affecting both mining throughput and transportation infrastructure.”
He said that “Australian supplies are also at risk from the La Nina weather phenomenon repeating itself noting, A combination of these two supply-side risks, combined with a healthier than expected winter appetite for coal in both of the basins, could provide a surprise boost to prices in this final quarter of the year. But this will only come if stocks at both the consumer as well as producer end reach critical levels.”
(Sourced from Montel)
Barclays Capital said that potential disruptions to Colombian and Australian supply could offer some support to coal prices in the final quarter of the year.
Analyst Miswin Mahesh in a note said that “Colombian supplies could be at risk, given that seasonally it is going through the wettest months of the year and there are expectations of a stronger-than-normal rainy season affecting both mining throughput and transportation infrastructure.”
He said that “Australian supplies are also at risk from the La Nina weather phenomenon repeating itself noting, A combination of these two supply-side risks, combined with a healthier than expected winter appetite for coal in both of the basins, could provide a surprise boost to prices in this final quarter of the year. But this will only come if stocks at both the consumer as well as producer end reach critical levels.”
(Sourced from Montel)
Saturday, November 12, 2011
Heavyweights shrug off October iron ore price crash
Saturday, 12 Nov 2011
Iron ore prices have turned around after crashing 30% in October, but longer term the outlook is not rosy thanks in large part to the aggressive go to market strategy of the big three.
BHP, Vale and Rio Tinto control nearly 70% of the 1 billion tonne annual iron ore seaborne trade and thanks to their economies of scale have been flooding the market by concentrating on building market share rather than maximizing prices. This way the giants drive high cost producers out of the business and crowd out any new players who want to enter the space. And their dominance is only set to increase.
BHP and Rio’s production plans for the Pilbara region of Australia alone is a staggering 750 million tonne per annum while current number one Vale is planning to start work on its biggest project to date next year - the Serra Sul iron ore mine alone will add 90 million tonne per annum to the Brazilian company's current 310 million tonnes capacity.
Many analysts believe that while prices were likely to rebound to around USD 140 per tonne by year end from the USD 130 per tonne now, they do not expect prices to return to the previous highs above USD 180 seen just two months ago. During October 62% iron ore fell USD 60 to a low of USD 115 per tonne. At USD 140 per tonne prices are still more than double what they were during the 2008 financial crisis. Not everyone agrees that BHP Billiton, Vale and Rio Tinto will be able to keep their grip on the market.
Reuters quotes Mr Graeme Hossie CEO of London Mining as saying that “It is well understood in the industry that there is a need for new entrants, and certainly China wants new entrants - they want alternatives to the large guys.”
Australia's Fortescue Metals is an example of China nurturing new entrants. the China-backed company is already exporting 40 million tonnes and wants to increase this sixfold. It's not as if the giants agree on any kind of strategy: Reuters reported last week Rio Tinto last week blamed softening prices on more spot sales by the larger Vale of Brazil into the Chinese spot market to compensate for waning sales in Europe. Vale has dismissed the claim, saying prices were falling because of a production increase in Australia and changes in Chinese credit policy at the end of September on BHP Billiton's plans to increase its production in the Pilbara region the heart of Australia’s iron ore mining to 450 million tonnes a year by adding infrastructure and building new mines.
BHP’s current iron-ore production capacity is 155 million tonnes a year in the Pilbara, while rival Rio Tinto’s capacity is 225 million tonnes a year. Rio Tinto announced earlier in the month that it wants to grow output to 333 million tonnes by 2015.
(sourced provider.mining.com)
Iron ore prices have turned around after crashing 30% in October, but longer term the outlook is not rosy thanks in large part to the aggressive go to market strategy of the big three.
BHP, Vale and Rio Tinto control nearly 70% of the 1 billion tonne annual iron ore seaborne trade and thanks to their economies of scale have been flooding the market by concentrating on building market share rather than maximizing prices. This way the giants drive high cost producers out of the business and crowd out any new players who want to enter the space. And their dominance is only set to increase.
BHP and Rio’s production plans for the Pilbara region of Australia alone is a staggering 750 million tonne per annum while current number one Vale is planning to start work on its biggest project to date next year - the Serra Sul iron ore mine alone will add 90 million tonne per annum to the Brazilian company's current 310 million tonnes capacity.
Many analysts believe that while prices were likely to rebound to around USD 140 per tonne by year end from the USD 130 per tonne now, they do not expect prices to return to the previous highs above USD 180 seen just two months ago. During October 62% iron ore fell USD 60 to a low of USD 115 per tonne. At USD 140 per tonne prices are still more than double what they were during the 2008 financial crisis. Not everyone agrees that BHP Billiton, Vale and Rio Tinto will be able to keep their grip on the market.
Reuters quotes Mr Graeme Hossie CEO of London Mining as saying that “It is well understood in the industry that there is a need for new entrants, and certainly China wants new entrants - they want alternatives to the large guys.”
Australia's Fortescue Metals is an example of China nurturing new entrants. the China-backed company is already exporting 40 million tonnes and wants to increase this sixfold. It's not as if the giants agree on any kind of strategy: Reuters reported last week Rio Tinto last week blamed softening prices on more spot sales by the larger Vale of Brazil into the Chinese spot market to compensate for waning sales in Europe. Vale has dismissed the claim, saying prices were falling because of a production increase in Australia and changes in Chinese credit policy at the end of September on BHP Billiton's plans to increase its production in the Pilbara region the heart of Australia’s iron ore mining to 450 million tonnes a year by adding infrastructure and building new mines.
BHP’s current iron-ore production capacity is 155 million tonnes a year in the Pilbara, while rival Rio Tinto’s capacity is 225 million tonnes a year. Rio Tinto announced earlier in the month that it wants to grow output to 333 million tonnes by 2015.
(sourced provider.mining.com)
Monday, October 31, 2011
Coal stock investors should look to India
Needs to add 75,000 MW of power generation over the next five years
Monday, October31, 2011
I’ve said it over and over – economic growth requires a cheap source of home-grown energy.
It doesn’t matter what country we’re talking about. Without cheap energy, economic growth stagnates, plain and simple. If energy is expensive, transportation gets expensive, and the cost of goods gets expensive. Consumer spending slows, and economic growth stagnates.
India may be facing just such a problem… To continue its economic growth, which is running at about nine percent annually, India needs to add 75,000 MW of power generation over the next five years.
India burns coal to generate about half of its electricity. In 2011, it’ll import about 54 million tons to generate power.
Nearly 85 percent of new generation over the next five years is targeted to come from coal-burning plants. That translates into a 400-percent rise in coal imports – to about 213 million tons by 2016 or 2017.
This is particularly ironic in that India is sitting on 10 percent of the world’s coal reserves, or approximately 267 billion tons.
How can a country with such vast reserves of coal have to increase its imports four times in as many years? The short and simple answer is bad policy decisions on the part of the government.
Coal India, a state-run monster, is the country’s main coal producer. Its 2010 production was a stagnant 431 tons. It’s suffered from increased environmental hurdles, difficulty in obtaining land and lack of adequate investment by India’s central government.
India’s growing supply gap
The widening power generation gap is particularly acute in India. Its rising middle class is demanding more shopping malls and air-conditioned homes and offices. The peak-power deficit (the amount of power needed versus what can be supplied) grew to 12 percent last year.
It’s going to get worse, and that could have a stalling effect on the country’s economic growth. Remember what happened here when oil prices shot through the roof?
India’s demand for coal has made Coal India the second-most valuable company in the country. Its 2010 IPO raised a record $3.5 billion. But even with that kind of investment, it will struggle to meet even a fraction of India’s additional demand for coal.
A report published by India’s Central Electric Authority, remarked “The Ministry of Coal/Coal India need to be impressed upon to formulate a contingency plan to meet the demand of the power sector.”
The reality is that there is no contingency plan. Even if the government came up with one, nothing would change short term.
The bottom line is that India will be importing four times the amount of coal it does now in five years. Countries and companies who export coal to India can sell all they can produce.
The demand from both India and China will keep a floor under coal prices, and the stocks of companies that produce and export it. Consider any one of the large coal exporters as a great place to start investing in the coal sector.
ABOUT THE AUTHOR
David Fessler, Investment U
Since 1999, Investment U has provided impartial, no-nonsense investment advice on how to build long-lasting wealth. www.investmentu.com
(sourced StockHouse)
Monday, October31, 2011
I’ve said it over and over – economic growth requires a cheap source of home-grown energy.
It doesn’t matter what country we’re talking about. Without cheap energy, economic growth stagnates, plain and simple. If energy is expensive, transportation gets expensive, and the cost of goods gets expensive. Consumer spending slows, and economic growth stagnates.
India may be facing just such a problem… To continue its economic growth, which is running at about nine percent annually, India needs to add 75,000 MW of power generation over the next five years.
India burns coal to generate about half of its electricity. In 2011, it’ll import about 54 million tons to generate power.
Nearly 85 percent of new generation over the next five years is targeted to come from coal-burning plants. That translates into a 400-percent rise in coal imports – to about 213 million tons by 2016 or 2017.
This is particularly ironic in that India is sitting on 10 percent of the world’s coal reserves, or approximately 267 billion tons.
How can a country with such vast reserves of coal have to increase its imports four times in as many years? The short and simple answer is bad policy decisions on the part of the government.
Coal India, a state-run monster, is the country’s main coal producer. Its 2010 production was a stagnant 431 tons. It’s suffered from increased environmental hurdles, difficulty in obtaining land and lack of adequate investment by India’s central government.
India’s growing supply gap
The widening power generation gap is particularly acute in India. Its rising middle class is demanding more shopping malls and air-conditioned homes and offices. The peak-power deficit (the amount of power needed versus what can be supplied) grew to 12 percent last year.
It’s going to get worse, and that could have a stalling effect on the country’s economic growth. Remember what happened here when oil prices shot through the roof?
India’s demand for coal has made Coal India the second-most valuable company in the country. Its 2010 IPO raised a record $3.5 billion. But even with that kind of investment, it will struggle to meet even a fraction of India’s additional demand for coal.
A report published by India’s Central Electric Authority, remarked “The Ministry of Coal/Coal India need to be impressed upon to formulate a contingency plan to meet the demand of the power sector.”
The reality is that there is no contingency plan. Even if the government came up with one, nothing would change short term.
The bottom line is that India will be importing four times the amount of coal it does now in five years. Countries and companies who export coal to India can sell all they can produce.
The demand from both India and China will keep a floor under coal prices, and the stocks of companies that produce and export it. Consider any one of the large coal exporters as a great place to start investing in the coal sector.
ABOUT THE AUTHOR
David Fessler, Investment U
Since 1999, Investment U has provided impartial, no-nonsense investment advice on how to build long-lasting wealth. www.investmentu.com
(sourced StockHouse)
Thursday, October 27, 2011
Coal miner Consol's Q3 profit rises, beats Street
Thu Oct 27, 2011
* Q3 net profit 73 cts/shr v Wall St view 68 cts/shr
* Revenue of $1.4 billion is company's highest Q3
Oct 27 (Reuters) - Coal and natural gas producer Consol Energy Inc's third-quarter profit beat Wall Street estimates, more than doubling on higher prices for its steel-making coal.
The company also raised its annual dividend 25 percent.
Net income was $167 million, or 73 cents per share, compared with $75 million, or 33 cents per share, a year earlier, the Pittsburgh-based company said on Thursday.
Analysts on average were expecting earnings of 68 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose to $1.4 billion -- Consol's highest ever for a third quarter. Most of the increase came from much higher average realized prices from steel-making metallurgical coal sales. The average was $209 per ton, compared with $165.61 per ton a year earlier.
For the second consecutive quarter, Consol generated more cash from its metallurgical business than from thermal, or steam coal, which is used to power electricity generation.
But Consol said profitability in its natural gas business division slipped from the 2010 quarter, despite 13 percent higher gas volumes. Unit gas margins fell, primarily due to a decrease in realized gas prices, it said, while unit gas costs declined, mostly because of higher proved reserves.
Consol said it expects overall unit costs to continue to decline over time as the company increases its emphasis on low- cost drilling in the Marcellus Shale region of the northeastern United States.
In the third quarter, Consol produced 14.7 million tons of coal -- in line with its estimate -- and it anticipates fourth-quarter production of 14.7 million to 15.3 million tons.
Two weeks ago, Consol said production at two of its Appalachian mines was affected by structural problems, but it still expects to hit its targets for the year.
Last month, the company raised its 2011 coal export forecast, saying it sees higher shipments to Asia and expects overall export markets to remain strong this year.
Consol's board of directors increased the regular annual dividend 25 percent, or 10 cents per share, to 50 cents per share. The regular quarterly dividend of 12.5 cents per share, is payable on Nov. 25, to shareholders of record on Nov. 11.
(sourced Reuters)
* Q3 net profit 73 cts/shr v Wall St view 68 cts/shr
* Revenue of $1.4 billion is company's highest Q3
Oct 27 (Reuters) - Coal and natural gas producer Consol Energy Inc's third-quarter profit beat Wall Street estimates, more than doubling on higher prices for its steel-making coal.
The company also raised its annual dividend 25 percent.
Net income was $167 million, or 73 cents per share, compared with $75 million, or 33 cents per share, a year earlier, the Pittsburgh-based company said on Thursday.
Analysts on average were expecting earnings of 68 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose to $1.4 billion -- Consol's highest ever for a third quarter. Most of the increase came from much higher average realized prices from steel-making metallurgical coal sales. The average was $209 per ton, compared with $165.61 per ton a year earlier.
For the second consecutive quarter, Consol generated more cash from its metallurgical business than from thermal, or steam coal, which is used to power electricity generation.
But Consol said profitability in its natural gas business division slipped from the 2010 quarter, despite 13 percent higher gas volumes. Unit gas margins fell, primarily due to a decrease in realized gas prices, it said, while unit gas costs declined, mostly because of higher proved reserves.
Consol said it expects overall unit costs to continue to decline over time as the company increases its emphasis on low- cost drilling in the Marcellus Shale region of the northeastern United States.
In the third quarter, Consol produced 14.7 million tons of coal -- in line with its estimate -- and it anticipates fourth-quarter production of 14.7 million to 15.3 million tons.
Two weeks ago, Consol said production at two of its Appalachian mines was affected by structural problems, but it still expects to hit its targets for the year.
Last month, the company raised its 2011 coal export forecast, saying it sees higher shipments to Asia and expects overall export markets to remain strong this year.
Consol's board of directors increased the regular annual dividend 25 percent, or 10 cents per share, to 50 cents per share. The regular quarterly dividend of 12.5 cents per share, is payable on Nov. 25, to shareholders of record on Nov. 11.
(sourced Reuters)
New World Resources Quarterly Coking Coal Price Falls 9%
Thu,October 27, 2011
Oct. 27 (Bloomberg) -- New World Resources Plc, the biggest Czech producer of coking coal, said the average agreed price for coking coal and coke delivery in the fourth quarter declined because of weaker European demand.
The price of coking coal fell 9 percent from the previous quarter to 171 euros ($239) per ton, the Amsterdam-based miner said today in a Regulatory News Service statement. Coke prices for the last three months of the year are seen at 341 euros a ton, down 13 percent from the previous quarter, the company said.
The thermal coal price for 2011 is unchanged at 71 euros a ton, the company said. The miner cut its 2011 coke sales estimate to between 525 and 575 kilotons, from a previous forecast of 720 kilotons.
The figures show continued weakness in coking coal prices and a decline in the price premium over Asian markets, Ceska Sporitelna AS analyst Petr Bartek wrote in a report to clients. The production mix of the company remains “weak,” wrote Bartek who recommends investors “accumulate” shares in the company.
NWR produces coking, or steelmaking, coal and thermal coal and owns four mines and two coking facilities in the Czech Republic. It sells coal to customers including the Czech unit of ArcelorMittal, the world’s largest steelmaker.
NWR, which reiterated its full-year production targets, fell 1.38 koruna, or less than 1 percent, to 143.62 in Prague trading as of 10:30 a.m.
(sourced Business Week)
Oct. 27 (Bloomberg) -- New World Resources Plc, the biggest Czech producer of coking coal, said the average agreed price for coking coal and coke delivery in the fourth quarter declined because of weaker European demand.
The price of coking coal fell 9 percent from the previous quarter to 171 euros ($239) per ton, the Amsterdam-based miner said today in a Regulatory News Service statement. Coke prices for the last three months of the year are seen at 341 euros a ton, down 13 percent from the previous quarter, the company said.
The thermal coal price for 2011 is unchanged at 71 euros a ton, the company said. The miner cut its 2011 coke sales estimate to between 525 and 575 kilotons, from a previous forecast of 720 kilotons.
The figures show continued weakness in coking coal prices and a decline in the price premium over Asian markets, Ceska Sporitelna AS analyst Petr Bartek wrote in a report to clients. The production mix of the company remains “weak,” wrote Bartek who recommends investors “accumulate” shares in the company.
NWR produces coking, or steelmaking, coal and thermal coal and owns four mines and two coking facilities in the Czech Republic. It sells coal to customers including the Czech unit of ArcelorMittal, the world’s largest steelmaker.
NWR, which reiterated its full-year production targets, fell 1.38 koruna, or less than 1 percent, to 143.62 in Prague trading as of 10:30 a.m.
(sourced Business Week)
Monday, October 24, 2011
Falling iron ore prices surprise market players
Monday, 24 October 2011
Spot iron ore prices have slid to their lowest in a year and are set to post their biggest weekly decline in 15 months. The decline in iron ore prices may worsen as the economy slows in China, the largest importer, as the European debt crisis persists and as Australian miners BHP Billiton (BHP) and Rio Tinto Group increase production, analysts have said. According to Macquarie Group analyst Bonnie Liu in Shanghai, iron ore for immediate delivery may drop to $140/mt by the end of the current year.
Weaker demand for steel in China, the world's biggest consumer and producer, has dragged down steel prices and slashed the appetite for iron ore, the key steelmaking raw material. However, iron ore prices have fallen so steeply and so rapidly in the past two weeks, surprising many market players, that most Chinese mills have opted to delay purchases and wait until prices stabilize.
Tags: iron ore , raw mat , steelmaking , steel futures
source steelorbis
Spot iron ore prices have slid to their lowest in a year and are set to post their biggest weekly decline in 15 months. The decline in iron ore prices may worsen as the economy slows in China, the largest importer, as the European debt crisis persists and as Australian miners BHP Billiton (BHP) and Rio Tinto Group increase production, analysts have said. According to Macquarie Group analyst Bonnie Liu in Shanghai, iron ore for immediate delivery may drop to $140/mt by the end of the current year.
Weaker demand for steel in China, the world's biggest consumer and producer, has dragged down steel prices and slashed the appetite for iron ore, the key steelmaking raw material. However, iron ore prices have fallen so steeply and so rapidly in the past two weeks, surprising many market players, that most Chinese mills have opted to delay purchases and wait until prices stabilize.
Tags: iron ore , raw mat , steelmaking , steel futures
source steelorbis
Wednesday, October 12, 2011
Iron Ore-Shanghai rebar hits contract low, ore extends losses
Wed Oct 12, 2011
* China mills seen cutting steel production
* Baosteel says to keep prices unchanged
By Manolo Serapio Jr
SINGAPORE, Oct 12 (Reuters) - Benchmark China steel futures fell to their lowest ever on Wednesday as weaker demand put further pressure on prices and will likely curb output in the world's top consumer and producer.
Baoshan Iron and Steel , China's biggest listed steelmaker, said it will keep prices of its main products unchanged next month after raising them in September and October, reflecting caution amid slower domestic appetite.
The most briskly traded January rebar contract on the Shanghai Futures Exchange fell as low as 4,255 yuan a tonne, the weakest level for the contract. By 0307 GMT, it was down 0.2 percent at 4,315 yuan.
Rebar, used in construction, dropped more than 11 percent in September, its biggest monthly loss ever, as tighter credit in China thinned demand for steel and a construction boom that fuelled a record production pace earlier in the year lost steam.
"We are going to see some production cuts definitely with steel prices at these levels. Some mills, especially the marginal producers, are not making money anymore," said Henry Liu, regional head of commodity research at Mirae Asset Securities in Hong Kong.
"Sentiment is quite bearish. We have not yet seen the bottom of the steel market."
China's average daily crude steel output declined 2.3 percent to 1.919 million tonnes in mid-September from the previous 10 days, industry data showed last month.
Prices of iron ore, the key component in making steel, may continue to fall if No. 1 buyer China cuts steel output.
Index-based spot iron ore prices, based on Chinese transactions and used by global miners in fixing supply contracts, slid on Tuesday to their lowest since March.
Iron ore with 62 percent iron content fell 1.3 percent to $164.40 a tonne, according to the Steel Index .IO62-CNI=SI and was down 1 percent at $165.25 based on Platts IODBZ00-PLT.
Metal Bulletin's similar gauge .IO62-CNO=MB dropped 1.3 percent to $165.26.
Prices of forward swaps <0#SGXIOS:> also extended losses, with the Singapore Exchange-cleared October contract down $2.58 to $161.67 a tonne and November falling more than $4 to $154.17, as buyers bet on a further decline in spot rates.
"I'm not confident about the market. There will be much less demand in winter because most construction activities will stop," said a Shanghai-based iron ore trader.
But the trader said cuts in China's steel output, if done aggressively, may allow prices to recover as mills rely on product inventories, tightening supply.
"That can help balance the market and boost demand again for iron ore," he said."
(sourced Reuters)
* China mills seen cutting steel production
* Baosteel says to keep prices unchanged
By Manolo Serapio Jr
SINGAPORE, Oct 12 (Reuters) - Benchmark China steel futures fell to their lowest ever on Wednesday as weaker demand put further pressure on prices and will likely curb output in the world's top consumer and producer.
Baoshan Iron and Steel , China's biggest listed steelmaker, said it will keep prices of its main products unchanged next month after raising them in September and October, reflecting caution amid slower domestic appetite.
The most briskly traded January rebar contract on the Shanghai Futures Exchange fell as low as 4,255 yuan a tonne, the weakest level for the contract. By 0307 GMT, it was down 0.2 percent at 4,315 yuan.
Rebar, used in construction, dropped more than 11 percent in September, its biggest monthly loss ever, as tighter credit in China thinned demand for steel and a construction boom that fuelled a record production pace earlier in the year lost steam.
"We are going to see some production cuts definitely with steel prices at these levels. Some mills, especially the marginal producers, are not making money anymore," said Henry Liu, regional head of commodity research at Mirae Asset Securities in Hong Kong.
"Sentiment is quite bearish. We have not yet seen the bottom of the steel market."
China's average daily crude steel output declined 2.3 percent to 1.919 million tonnes in mid-September from the previous 10 days, industry data showed last month.
Prices of iron ore, the key component in making steel, may continue to fall if No. 1 buyer China cuts steel output.
Index-based spot iron ore prices, based on Chinese transactions and used by global miners in fixing supply contracts, slid on Tuesday to their lowest since March.
Iron ore with 62 percent iron content fell 1.3 percent to $164.40 a tonne, according to the Steel Index .IO62-CNI=SI and was down 1 percent at $165.25 based on Platts IODBZ00-PLT.
Metal Bulletin's similar gauge .IO62-CNO=MB dropped 1.3 percent to $165.26.
Prices of forward swaps <0#SGXIOS:> also extended losses, with the Singapore Exchange-cleared October contract down $2.58 to $161.67 a tonne and November falling more than $4 to $154.17, as buyers bet on a further decline in spot rates.
"I'm not confident about the market. There will be much less demand in winter because most construction activities will stop," said a Shanghai-based iron ore trader.
But the trader said cuts in China's steel output, if done aggressively, may allow prices to recover as mills rely on product inventories, tightening supply.
"That can help balance the market and boost demand again for iron ore," he said."
(sourced Reuters)
Thursday, August 25, 2011
Buy Coal India for the long term: Ashwani Gujral
25 Aug, 2011, | By ET
Ashwani Gujral, Chief Market Strategist, ashwanigujral.com (Technical Check) in a chat with ET Now gives his views on various stocks.
ET Now: Do you think Coal India is a good classic stock to buy on every decline and the bull market is still on for the stock?
Ashwani Gujral: There are some policy headwinds on mining but anybody who owns real assets over the longer term will be a good buy. So, around 360-365 if one is able to tide over all of these bills and the policies, Coal India is a decent long-term holding for people and around levels of 360, it has fairly good support. For the moment while the market is coming down, it has been strong. Whenever the market turns, chances are that Coal India will get back to new highs. By that time, probably we will solve our mining issues. So, this blip should be used to get into Coal India.
Ashwani Gujral, Chief Market Strategist, ashwanigujral.com (Technical Check) in a chat with ET Now gives his views on various stocks.
ET Now: Do you think Coal India is a good classic stock to buy on every decline and the bull market is still on for the stock?
Ashwani Gujral: There are some policy headwinds on mining but anybody who owns real assets over the longer term will be a good buy. So, around 360-365 if one is able to tide over all of these bills and the policies, Coal India is a decent long-term holding for people and around levels of 360, it has fairly good support. For the moment while the market is coming down, it has been strong. Whenever the market turns, chances are that Coal India will get back to new highs. By that time, probably we will solve our mining issues. So, this blip should be used to get into Coal India.
Tuesday, August 23, 2011
Essar Energy hit by project delays
Aug22,2011
* Still awaiting forest clearance for some coal blocks
* Says minor delays to three power projects
* Analysts say company faces a trust deficit after project hold-ups
* H1 EBITDA $477.9 million vs $467 mln consensus
* Shares fall 4.4 pct
* Still awaiting forest clearance for some coal blocks
* Says minor delays to three power projects
* Analysts say company faces a trust deficit after project hold-ups
* H1 EBITDA $477.9 million vs $467 mln consensus
* Shares fall 4.4 pct
LONDON (Reuters) - India-focused refiner and power generator Essar Energy said three projects would be delayed as it continues to battle hold-ups from regulators, hurting its shares.
The company said on Monday there would be "minor delays" to its Salaya I, Mahan I and Vladinar phase 2 power projects and that it is still awaiting forest clearance from the Indian government for its Mahan, Chakla and Ashok Karkata coal blocks which will provide fuel for the Mahan I and Tori power stations.
Shares in Essar traded down 4.4 percent to 246.3 pence, paring earlier losses of as much as 6 percent, and making the company the biggest loser on Britain's bluechip index .
"We believe that Essar Energy now faces a trust deficit and therefore there will be an even greater investor focus on project delivery times," said analysts at JP Morgan in a note.
Essar Energy said in its statement: "Delays to regulatory approvals and delays to the access of fuel supplies are a cause for concern."
"Not only do these delays impact the economic returns on projects, but they are acting to discourage investment in the sector from project sponsors, debt providers and equity investors."
For the six months ended June 30, the company posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $477.9 million, up from $320.2 million last year, boosted by higher refinery margins.
This compared with a company-supplied anlayst consensus figure of $467 million.
JP Morgan said in a note that when measured on a current price basis, earnings missed consensus, having been negatively impacted by a foreign exchange loss in the company's oil and gas unit.
The FTSE 100 company was positive on the future of its refining business, saying it expected margins to stay at their current high levels to the end of 2011.
"Strong global demand, the earthquake in Japan and events in the Middle East and north Africa pushed up refining margins in the first half of 2011," the company said.
The company, which agreed to buy Royal Dutch Shell's (RDSa.L) Stanlow refinery in northwest England for $350 million in February, said its focus was on its Indian power projects and integrating Stanlow into its business.
"We do not have any plans for any further acquisitions of refineries in Europe or elsewhere," chief executive Naresh Nayyar said in a conference call with reporters.
Essar Energy, the majority shareholder in India-listed Essar Oil , is itself 77 percent-owned by privately-held Indian conglomerate Essar Group.
The company said on Monday there would be "minor delays" to its Salaya I, Mahan I and Vladinar phase 2 power projects and that it is still awaiting forest clearance from the Indian government for its Mahan, Chakla and Ashok Karkata coal blocks which will provide fuel for the Mahan I and Tori power stations.
Shares in Essar traded down 4.4 percent to 246.3 pence, paring earlier losses of as much as 6 percent, and making the company the biggest loser on Britain's bluechip index .
"We believe that Essar Energy now faces a trust deficit and therefore there will be an even greater investor focus on project delivery times," said analysts at JP Morgan in a note.
Essar Energy said in its statement: "Delays to regulatory approvals and delays to the access of fuel supplies are a cause for concern."
"Not only do these delays impact the economic returns on projects, but they are acting to discourage investment in the sector from project sponsors, debt providers and equity investors."
For the six months ended June 30, the company posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $477.9 million, up from $320.2 million last year, boosted by higher refinery margins.
This compared with a company-supplied anlayst consensus figure of $467 million.
JP Morgan said in a note that when measured on a current price basis, earnings missed consensus, having been negatively impacted by a foreign exchange loss in the company's oil and gas unit.
The FTSE 100 company was positive on the future of its refining business, saying it expected margins to stay at their current high levels to the end of 2011.
"Strong global demand, the earthquake in Japan and events in the Middle East and north Africa pushed up refining margins in the first half of 2011," the company said.
The company, which agreed to buy Royal Dutch Shell's (RDSa.L) Stanlow refinery in northwest England for $350 million in February, said its focus was on its Indian power projects and integrating Stanlow into its business.
"We do not have any plans for any further acquisitions of refineries in Europe or elsewhere," chief executive Naresh Nayyar said in a conference call with reporters.
Essar Energy, the majority shareholder in India-listed Essar Oil , is itself 77 percent-owned by privately-held Indian conglomerate Essar Group.
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