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Iron ore prices slide as growth in China slows

admin — Mon, 30 Apr 2012 07:39:01 +0000

Iron ore prices, hit by weak steel demand in China, will continue to suffer as Europe slides back into recession.
Prices remained depressed this week, with sluggish demand from China providing no impetus for a rally.
The Asian economic powerhouse has showed signs of a slowdown, and the resultant drop in steel demand has reduced demand for iron ore, a component of steel.
“Buying interest has been absolutely zero,” an iron ore trader based in Shanghai told Reuters on Wednesday. “Selling has become increasingly difficult given the recent fall in steel prices.”
The benchmark 62 per cent grade iron ore steadied this week at US$146.70 per tonne, a one-month low, according to data by the Steel Index.
China’s first-quarter economic growth was the slowest in almost three years, but steel production at least remained above the 2 million tonnes-per-day threshold, according to the China Iron and Steel Association.
Europe’s economic travails are likely to hold back any recovery in the global iron ore market.
“The main factor so far has been China, as the year progresses that will switch to Europe,” said Ross Strachan, a metals analyst at Capital Economics. Europe’s purchasing managers index for manufacturing declined to the lowest levels in almost three years, and Capital Economics forecasts iron ore will fall to $125 a tonne by the end of the year.
“This is a significant drop from the current situation, and the weakness in demand is very much the key to that,” said Mr Strachan.
China’s demand slump has affected miners’ earnings, with Brazil’s Vale, the worlds biggest producer of iron ore, recording a strong earnings decline in the first quarter.
Vale’s first-quarter profit declined by more than 40 per cent to $3.8 billion, a third consecutive quarterly drop.
Analysts expect mining companies will continue to find their earnings depressed by low prices.
“As the year goes on, this is increasingly likely,” said Mr Strachan.
Source: The National

IFM delays furnace restart to June

admin — Thu, 26 Apr 2012 05:53:33 +0000

JOHANNESBURG (miningweekly.com) – London-listed International Ferro Metals (IFM) on Wednesday reported a 5% drop in production owing to furnace shutdowns during the three months ended March.

Eskom-related furnace shutdowns reduced ferrochrome production to 48 762 t, from 51 446 t in the corresponding period in 2011, the South African ferrochrome producer reported.

To assist the State-owned power utility’s electricity supply balance, IFM participated in the industry-wide Eskom electricity buy-back programme and switched off two furnaces during March and April.

Eskom’s buy-back of the unused electricity had moved IFM into profit, resulting in the company’s decision to delay restarting both furnaces until June. The company initially said it would restart one furnace on May 1 and the other on June 1.

“International Ferro Metals is making excellent progress in improving its competitiveness through initiatives such as an improved reductant mix, furnace roof rebuild, the UG2 plant and the co-generation plant. This has been augmented by the attractive short-term benefit of our agreement with Eskom, which is value accretive to shareholders,” said CEO Chris Jordaan.

The company’s cogeneration plant generated 7.6 GWh of electricity, or 3.8% of IFM’s electricity requirements for the quarter, compared to 10 GWh for the previous quarter. The modifications to the plant’s engines, which resulted in the drop, were expected to be complete by the end of the month at a cost of R11-million.

At full production, the plant was expected to provide about 11% of the company’s total electricity requirements.

Meanwhile, IFM sold 52 930 t of ferrochrome during the quarter compared to 48 402 t sold in the first quarter of 2011.

Chrome ore sales reached 59 226 t, a level which was expected to be maintained going forward.

“Forecast ferrochrome sales in the second quarter will be substantially lower than in the quarter under review due to the shutdowns, but will selectively be countered by higher sales of chrome ore,” the company said in a statement.

Run-of-mine ore production for the quarter to March 2012 increased to 293 000 t, up from 194 000 t in the corresponding quarter of 2011.

Edited by: Mariaan Webb

Contract experts tackle topical issues at Singapore DC meeting

admin — Wed, 25 Apr 2012 08:56:20 +0000

BIMCO’s Documentary Committee, chaired by Mr Karel Stes, gathered in Singapore for its spring meeting on 23 April. The Committee’s contract experts reviewed a number of new contracts and clauses dealing with a wide variety of topical subjects ranging from wind farms to solid bulk cargoes that can liquefy. A new standard pooling agreement was adopted following two and half years of development work. Also adopted by the Committee were three new standard clauses covering EU advanced cargo declaration requirements under voyage charter parties; slow steaming under a voyage charter; and a clause addressing the very topical issue of solid bulk cargoes that liquefy.
In addition to the adoption of a new contract and three new clauses, the Committee also discussed a number of on-going going projects as well as adding several new tasks to its busy work programme. There were two clauses considered by the Committee which were returned to their respective drafting groups for further work because consensus could not be reached on their adoption. The clauses deal with hull fouling and compliance with OFAC. As far as hull fouling goes, the Committee members felt that further consideration needed to be given to the duration of idling as a result of charterers’ orders following which the owners’ performance warranty would be suspended pending inspection and/or cleaning of the hull by the charterers. The proposed OFAC Clause provides a mutual obligation on owners and charterers to warrant that they are not on the OFAC SDN list and that the ship is not a Blocked Vessel. However, the reporting requirements proposed in the clause were felt by the Committee members to go beyond what is normally expected in a commercial agreement.
The Committee also reviewed a first draft of the WINDTIME time charter party being developed for the offshore wind farm industry. This new contract is based on SUPPLYTIME 2005 but with many updated provisions tailored to this sector of the industry. The Committee provided a lot of useful feedback and suggestions which will be relayed to the drafting team. It is hoped that a final draft of this contract will be ready to be adopted in November.
Virtual Arrival was another issue discussed at the meeting. It had originally been planned to draft a slow steaming clause for voyage charter parties that incorporated a virtual arrival provision. However, the drafting group quickly concluded that this would result in an overly complex clause and that the issue of slow steaming under a voyage charter and virtual arrival should be dealt with in two separate clauses. The Committee reviewed the draft virtual arrival clause and provided positive feedback to the drafting group to assist them in the completion of this task by later this year.
Following the publication of the highly successful GUARDCON contract and the adoption in Singapore of the standard Pooling Agreement and three new clauses, the Committee has freed up some resources to enable it to tackle new projects. The new projects will include a revision of the BIMCO War Risks Clauses; a review of the Piracy Clauses and the possible development of some recommended clauses to address concerns with possible liability issues related to the maritime Labour Convention 2006 in respect of crew provided by crew managers on a lump sum basis and charterers’ personnel employed on offshore vessels. BIMCO’s Standard Dispute Resolution Clause will also be revised to incorporate a new Asian arbitration venue – Singapore – as a fourth choice of arbitration venue under the clause (the others being New York, London and a free choice).
Source: BIMCO

Richards Bay below $100/mt for 1st time since Nov 2011

admin — Wed, 25 Apr 2012 07:27:09 +0000

The South African Richards Bay FOB physical thermal coal market traded below $100/mt for the first time in five months Tuesday, with sources citing weak demand from India and China, as well as competition from Colombian and US cargoes as pushing down on prices. A May-loading Capesize traded via the globalCOAL screen during the morning session at $99.70/mt. The trade was 35 cents below Platts 90-day daily prices assessment of $100.05/mt Monday. The deal is also $2.60 lower than the last time a May-loading Richards Bay cargo traded at $102.30/mt on April 13. A London-based trading source said that the monsoon season was almost upon India, with buyers stepping back, adding that the weak European-delivered CIF Amsterdam-Rotterdam-Antwerp market was also putting downward pressure on the South African market. “Eventually something had to crack, and now it has,” he said. The Richards Bay market has been hovered around $103/mt for most of March and April, with sources mostly at a loss to explain the steady support around this level in the face of dwindling demand and competition from other origins. Another market participant said there was a lack of buyers for South African coal and the falling Newcastle market is also pushing down prices, but taking into account current freight from South Africa to Asia and Asian interest levels, the market is likely to find a floor at about $98/mt. The trader said that it was hard to pinpoint where the market would find support, but said that $98/mt was “not a bad value” and that the market was “not too oversupplied,” with Chinese buyers expected come in to restock sometime before the summer season. Source: Jacqueline Holman, Platts

Dig-out port tenders issued

admin — Tue, 24 Apr 2012 07:54:34 +0000

State-owned freight logistics group Transnet has followed up its recent R1.8-billion purchase of the old Durban International Airport site, in KwaZulu-Natal, with the release of a number of separate tenders in support of its proposal to develop, in phases, a new dig-out port on the property, reports Creamer Media.
The first request for proposals (RFP) relates to the appointment of a transaction adviser for the project.
The second RFP invites consultants to conduct conceptual and prefeasibility studies for the development.

Cape Town ban on vehicles in terminal

admin — Mon, 23 Apr 2012 07:27:00 +0000

Following an unpopular ban on private vehicles in terminals that has been imposed at Transnet Port Terminals (TPT) in Durban and Richards Bay, TPT in Cape Town has announced a similar ban on motor vehicles in the agri, ro-ro and multi-purpose terminal of the port.

Clients of TPT are requested to park their vehicles in the parking zone near the Culemborg entrance from where a TPT shuttle bus will take them to the various terminal points. The move is expected to prove equally unpopular at Cape Town, particular as the port currently has only two shuttle buses available to launch this new service.

Peabody sees 10% growth in seaborne coal demand this year

admin — Fri, 20 Apr 2012 07:41:22 +0000

JOHANNESBURG (miningweekly.com) – Peabody Energy, the largest US coal miner, on Thursday said it expected global demand for coal to increase significantly over the next decade, despite cooling US markets.

The NYSE-listed company said coal-fuelled heat and power generation was on the decline in the US, owing to mild weather and coal-to-gas switching.

“Near-term markets reflect the strength of Asia re-emerging as the leader of global economic growth and increased coal consumption. China’s steel production rebounded in March, its coal imports are running at a record pace, significant new global generation is coming on line, and we look for a 10% increase in seaborne coal demand in 2012,” CEO Gregory Boyce said in the company’s quarterly management statement.

He added that growing global electricity generation and rising steel production capacity use was driving record global coal imports, which were expected to increase by 10% during this year. China’s net coal imports through February totalled 58-million tons, an 81% increase over the prior year to meet rising coastal demand for both metallurgical and thermal coal.

Chinese steel production accelerated throughout the first quarter and electricity generation was up 7% over 2011. This year, China’s domestic coal production was targeted to grow at half the rate of electricity generation, leading to strong import growth.

Meanwhile, India’s coal-fired power generation had increased 9% during the year, and coal imports were expected to set another new record, led by rising thermal coal demand. India had also lifted its tariff on imported coal to encourage greater imports.

Further, Japan was increasing thermal coal imports owing to high seaborne natural gas prices and nuclear generation that has been reduced to just one active plant.

“Coal supply faces constraints around the world, including rising costs of supply and transportation challenges in China, ongoing production shortfalls in India, limited rail and port capacity in multiple countries, as well as cost-, labour- and weather-related challenges in a number of regions.

“Peabody expects these global trends to continue for years, as China and India lead the global build out of coal-fuelled generation. Nearly 90 GW of new coal-fired generation are expected to come on line in 2012, representing more than 300-million tons of additional thermal coal demand. And over the next five years, Peabody expects new coal-fuelled generation to grow by 385 GW, which would require more than 1.3-billion tons of additional thermal coal,” the miner said.

Peabody expected China’s coal consumption to grow by more than one-billion tons by 2015, to about five-billion tons a year.

In India, about 70 GW of coal-fired generation were expected to start up in the next five years, requiring nearly 250-million tons of additional coal, much of which was expected to be supplied through increased imports.

Further, global steel production was expected to increase as emerging nations continued to urbanise and industrialise, prompting Peabody to anticipate global metallurgical coal demand growth of about 50-million tons a year every year over the next five-plus years.

Peabody reported a slight drop in year-on-year first-quarter profit, posting earnings of $0.63 a share, or profit of $172.7-million, compared with earnings a share of $0.65, or profit of $176.5-million for the same period last year.

The weaker earnings came despite first-quarter revenue rising by 17% to $2.04-billion, driven by a 27% increase in Australian revenue a ton and a 7% rise in US revenue a ton. These improved figures were achieved on the back of sales volumes of 61.7-million tons being above levels achieved during the previous year of 61.2-million tons.

“Our operations contributed higher revenues and margins per ton in all regions, demonstrating the strength of our diverse platform in the face of challenging conditions.

“Looking forward, our US coal position remains fully priced for 2012, Australian thermal coal demand remains strong, and recent data suggest that metallurgical coal markets have stabilized with upside potential in the second half,” Boyce said.

The company targeted total sales this year of between 235-million tons to 255-million tons.

Edited by: Mariaan Webb

War planes strike suspected Somali pirate base: coastguard

admin — Thu, 19 Apr 2012 06:44:51 +0000

War planes fired several missiles at a suspected Somali pirate base in the north of the war-torn country, wounding two civilians, a coastguard official said. “Unknown military jets fired several missiles near the village of Gumah, elders told us at least two civilians were injured,” said Mohamed Abdirahman, a coastguard. Witnesses said the aircraft struck the north-eastern coastal village, which lies some 220 kilometres (140 miles) east of Bossaso, the main port of Somalia’s breakaway Puntland state. “Two aircraft attacked the village, which is between Hafun and Bargal towns…it came from the sea, and I think they were targeting pirates,” said Muse Jama, an elder. Several other witnesses confirmed the bombardment, but could not give further details of the planes. “Officials in the area are investigating the incident,” Abdirahman added, speaking from Bossaso. Kalashnikov-wielding pirates prowl far out across the Indian Ocean from their bases in northern Somalia, seizing foreign ships which they hold for several months demanding multi-million dollar ransoms. Last month the European Union authorised its navies to strike Somali pirate equipment on land, with a mandate for warships or helicopters to fire at fuel barrels, boats, trucks or other equipment stowed away on beaches. However, it was not possible to establish which nation the aircraft belonged to, and the EU force have not yet said they have ever launched such an attack. A spokesman for Atalanta, the EU anti-piracy mission, said it was “not involved whatsoever” and declined comment on who might be behind the strike. The United States also operates unmanned drones flying over the Horn of Africa nation, and have reportedly struck suspected Al-Qaeda allied fighters in southern Somalia. Piracy has flourished off war-torn Somalia, outwitting international efforts including constant patrols by warships and tough sentencing of the pirates they capture. The EU’s anti-piracy patrol has deployed between five and 10 warships off the Somali coast since 2008 to escort humanitarian aid shipments and thwart pirate raids on commercial vessels using vital shipping lanes. Several other nations, including Russia and China, also provide protection for their ships as they pass through the busy shipping route through the Gulf of Aden and the Indian Ocean. The pirates are believed to be holding dozens of ships and hundreds of sailors for ransom, and have also branched out into land based kidnapping. In January, a daring US-led commando raid rescued two aid workers – an American woman and a Danish man – held hostage in central Somalia. Source: AFP

IMF: Outlook Slowly Improving but Remains Fragile

admin — Wed, 18 Apr 2012 07:41:57 +0000

Prospects for the global economy are slowly improving again, but growth is expected to be weak, especially in Europe, and unemployment in many advanced economies will stay high, according to the IMF’s latest forecast. Although action by policymakers in Europe and elsewhere has helped to reduce vulnerabilities, risks of a renewed upsurge of the crisis in Europe continue to loom large, along with geopolitical uncertainties affecting the oil market. Real GDP growth should pick up gradually during 2012-13 from a trough seen in the first quarter of 2012, with signs of improvement in the United States, and the emerging economies remaining supportive. The IMF raised its projection for the United States to 2.1 percent this year and 2.4 percent next year from 1.7 percent in 2011. It has also slightly improved its forecast for the euro area compared with January. But it still projects a mild contraction in the euro area, where concerns about high sovereign debt and fiscal consolidation have taken a toll, although Germany and France might see positive growth. Japan, bouncing back from last year’s destructive earthquake and tsunami, will see a recovery of 2 percent. Overall, global growth is projected to drop from close to 4 percent in 2011 to about 3½ percent this year, picking up to 4.1 percent next year, the IMF said in its April 2012 World Economic Outlook, released on April 17 ahead of the Spring Meetings of the IMF and the World Bank in Washington. Rollercoaster ride “For the past six months we’ve been on a rollercoaster ride,” said IMF Chief Economist Olivier Blanchard. “Our baseline is that growth is going to be slow in advanced economies; sustained, but not great, in emerging market and developing economies. But the risk of things turning bad again in Europe is high.” IMF Managing Director Christine Lagarde said in a speech at a Washington think tank last week that recent European action had helped improve the economic climate, but prospects were still fragile. The IMF is pressing for additional resources to enable it to contain economic contagion in the event of a new crisis. Japan has pledged an additional $60 billion to the Fund. Need for continued policy measures “The building of the firewalls, when it is completed, will represent major progress,” Blanchard said in a foreword to the report. But he warned that the firewalls would not, by themselves, solve the difficult, fiscal, competitive, and growth issues faced by some struggling economies. The report said that governments should strengthen policies to solidify the weak recovery and contain potential risks that can weigh on consumer and investor confidence. Advanced economies should implement medium-term budgetary savings, but not in a way that could undermine the recovery. In developing countries and emerging markets, policies should be geared toward ensuring a soft landing for economies that have seen sustained, very strong credit growth. Outlook by region The report highlighted the following regional prospects: • North America. U.S. economic growth is projected at 2.1 percent in 2012 and 2½ percent next year, reflecting ongoing fiscal consolidation and continued weakness in housing prices. In Canada, growth will moderate slightly to close to 2 percent. • Asia. Weaker external demand has dimmed the outlook for Asia. But resilient domestic demand in China, limited financial spillovers, room for policy easing, and the capacity of Asian banks to step in as European banks deleverage suggest that the soft landing under way is likely to continue. Overall, growth in Asia will average 6.0 percent, with China slowing to 8.2 percent and India to 6.9 percent. • Europe. Real GDP in the euro area is projected to contract in the first half of 2012 but then start recovering, except in Spain, Italy, Greece, and Portugal where recovery will only begin in 2013. Many advanced economies outside the euro area avoided large precrisis imbalances, which helped cushion the spillovers from the euro area. But in the United Kingdom, whose financial sector was hit hard by the global crisis, growth will be weak in early 2012. Growth in emerging Europe is projected to slow sharply to 1.9 percent this year, reflecting its strong economic and financial linkages with the euro area. Europe as a whole will see projected growth of 0.2 percent in 2012 and 1.4 percent next year. • Russia and Commonwealth of Independent States. Weaker exports to Europe and policy tightening in some economies will moderate growth this year, even though commodity prices will remain high. Overall growth will fall to 4.2 percent. • Latin America and the Caribbean. Growth is projected to moderate to 3¾ this year before recovering above 4 percent in 2013. Overheating risks have receded but could reemerge if capital flows rev up again, putting exchange rates under pressure. Overall, the report says the outlook for the region is promising. • Middle East and North Africa. Growth in the region’s oil importers will be constrained by strong oil prices, anemic tourism associated with the social unrest in the region, and lower trade and remittance flows reflecting the ongoing problems in Europe. Among oil exporters, negative developments in the Islamic Republic of Iran are projected to be offset by increased oil production in Iraq and Saudi Arabia and a bounce back in Libya. Overall growth for the region is forecast at 4.2 percent in 2012, with oil producers buoyed by continued high oil prices, but inflation will average 9.5 percent. • Sub-Saharan Africa. The pace of growth is projected to pick up in 2012 to 5.4 percent, with the region relatively less exposed to the global slowdown but not immune to spillovers from the euro area’s problems. South Africa, which has stronger trade and financial ties with slowing Europe, is struggling with subpar growth and high unemployment. Source: IMF

Green light for Durban’s new port

admin — Tue, 17 Apr 2012 06:35:07 +0000

The Competitions Tribunal has given its seal of approval to Transnet’s R1.8-billion purchase of Durban International Airport which is set to be dug out and converted into the city’s second sea port, according to the Mercury. DIA was decommissioned in May 2010 following the opening of King Shaka International Airport north of the city.