China was expected to produce 3.65 billion tonnes of coal in 2016, down 0.82% from 3.68 billion produced last year, said the National Energy Administration (NEA) in a guideline.

http://en.sxcoal.com/0/143823/DataShow.html

India's state-run coal producer Coal India Limited (CIL) produced 536.51 million tonnes of coal in fiscal year 2015-2016 ended March 31, up 8.5% on year, the company said in a regulatory filing late April 1.

Coal ministry officials attributed this to the clearing of 4,179 hectares of forested land.

CIL missed its production target for the fiscal year by 13.49 million tonnes, the company said in the filing to the Bombay Stock Exchange.

Sales for the year stood at 532.26 million tonnes, up nearly 9% year on year but below targeted 550 million tonnes, it said.

CIL accounts for around 80% of India's domestic coal production, and has an ambitious target to double its output to 1 billion tonnes by 2020.

http://en.sxcoal.com/0/143822/DataShow.html

---

Attached Files

A decline in South Africa’s coal exports has continued but the country’s relatively strong position on the cost curve is expected to give coal producers some breathing room.

Thermal coal exports fell 19.7% year-on-year to 4.82 million tonnes (Mt) in February, following a 7.2% decrease in annual exports in January.

“Comparatively strong Richards Bay Free-On-Board spot prices have been hindering buying interest for South African thermal coal this year, with low dry bulk freight rates also allowing for competition from lower priced material from other origins into large market India, as well as Europe and Turkey,” said Platts in a note.

According to the data provider, South Africa’s coal exports to India fell 12% month-on-month in February to 2.66Mt – the lowest monthly volume since September 2015. The Indian government’s attempts to stimulate its domestic output may further impact exports to the world’s second largest coal buyer.

Although analysts say India is unlikely to meet its target to cease thermal coal imports by 2017, barring imports at some coastal power stations, the Modi Administration’s attempts to double Coal India’s production to 1 billion tonnes by 2020 are progressing relatively well.

The state-owned company, which produces 80% of the country’s domestic thermal coal, increased output by 8.5% to a record 536Mt during the financial year ended March 31  2016.  According to a recent Bloomberg New Energy Finance report, Coal India achieved production growth of 2.7% year-on-year between its 2010 and 2015 financial years. “We believe that these higher growth rates are the ‘new norm’ as some of the production issues which have plagued their output historically are being overcome,” it said in reference to issues around permits, land acquisition and railway capacity.

Dave Collins, an associate director at MAC Consulting, warned miners at a local conference against relying on the Indian market. “Whoever is thinking that India is going to save them, needs to investigate that very carefully,” he said citing the data from Bloomberg New Energy Finance, which deduces that Indian coal imports would only increase at a compound annual growth rate of 0.9% from 2020 to 2030 “in an excessively pessimistic” domestic production scenario.

At the same time, China’s plans to cut domestic coal output don’t necessarily bode well for South African coal exports. In an effort to reduce industrial overcapacity, the world’s largest coal consumer aims to eliminate 60Mt of domestic coal output in 2016 and a total of 500Mt in three to five years. The country’s National Energy Administration has also ordered 13 provincial governments to suspend approvals for new coal-fired power plants until the end of 2017. A Greenpeace report on the global coal plant pipeline shows that the “aggressive” construction of new coal-fired power stations saw the country’s plant utilisation rate fall to 49.4% – the lowest level since 1969.

China’s coal consumption fell by 3.7% while imports fell 30% to 204.1 million tonnes in 2015, partly due to the effects of the country’s economic rebalancing. “We haven’t seen coal shipments from Richards Bay to China since the middle of 2014. Several shipments have been diverted to India and China has been taking more coal from Australia and Indonesia,” Peter Sand, chief shipping analyst at BIMCO told Mineweb recently.

Shoaib Vayej, a portfolio manager at Afena Capital, expects South African coal exports to hold up amid the challenging conditions. “South African producers are well positioned on the cost curve and the weakness in the rand is solidifying this position. From a volume perspective, I don’t see much of a change but prices will be affected and this will affect earnings,” he said.

While coal prices haven’t topped $50/tonne, he said prices have remained resilient and has dismissed the futures market suggestion that prices should be closer to $40/tonne. “About 40% of the market is underwater. If we take away China and say India doesn’t grow, that’s still not enough to justify such prices. Unless half the market goes away $40/tonne isn’t warranted,” he said. According to Vayej, South African producers are still likely to break even at prices of $40/tonne, “Given the serious pain around the world right now, breaking even wouldn’t be too bad”.

http://www.mineweb.com/news/coal/sa-coal-exports-heading-off-a-cliff/

---

Attached Files

Australia's Fortescue Metals Group on Monday continued its drive to reduce overhead amid a wary outlook for iron ore, saying it won't renew a contract with Downer EDI Ltd.

Mining services companies in Australia such as Downer have been hard hit by a sharp drop in the prices of iron ore, which sells for roughly a quarter of its near-$200 a tonne peak of 2011, leading more producers to self-operate.

Miners typically seek to cut costs by removing fees incurred by outsourcing. Companies also believe they are more in control by managing their own mines.

Fortescue said it would take over operations at its Christmas Creek mine in Western Australia once its outsourcing contract with Downer expires in September.

"Adoption of an owner-operator model will further reduce Fortescue's costs through ongoing improvement of the efficiency and productivity of our Christmas Creek mining operations," Fortescue Chief Executive Officer Nev Power said in a statement.

The market capitalisation of Australian mining services companies in a Deloitte index of stocks fell by $5.56 billion in the second half of 2015 versus the first half.

Australia is home to the world's single-biggest biggest iron ore deposits. Fortescue, along Rio Tinto and BHP Billiton , controls more than half the 1 billion-tonne-per-year global seaborne trade in the steel-making ingredient.

The Christmas Creek mine is located in the Chichester ranges in the Pilbara iron belt and, along with another mine called Cloudbreak, can produce up to 90 million tonnes of ore a year. Fortescue is forecasting overall production this year of 165 million tonnes.

Fortescue, controlled by founder Andrew "Twiggy" Forrest, announced in February its had cut its production costs by 47 percent from the prior year and forecast it would drop to $13 a tonne by the end of 2016.

"The industry has been extremely clever about reducing costs and increasing competitiveness in a really tough market," said Simon Bennison, chief executive of the Association of Mining and Exploration Companies in Australia.

Downer confirmed that it was handing over operations at Christmas Creek, but said it did not expect the change to affect its 2016 financial results.

BHP initiated a move away from contract mining in 2011 by acquiring HWE Mining, which was operating some of its Pilbara iron ore mines.

Rio Tinto, which runs it own mines, has said it reduced working capital by 83 percent in 2015 and saw a 20 percent productivity improvement.

http://www.reuters.com/article/fortescue-downer-edi-idUSL3N17725M

Iron ore shipments to China from Australia's Port Hedland, used by miners such as BHP Billiton , rose nearly 12 percent in March, data showed on Tuesday.

Exports to China from the port - the world's largest of its kind - reached 32.59 million tonnes in March, up from the 29.14 million tonnes in February, Pilbara Port authority figures showed.

Stronger Australian iron ore exports helped underpin an upturn in prices for the steelmaking raw material. Iron ore .IO62-CNI=SI ended January-March with a 24-percent gain after pushing above $50 a tonne.

It is still the top performing commodity this year despite falling 16 percent from last month's peak, but the wild swings have kept miners wary about the longevity of the price recovery.

BHP has set a production target of 237 million tonnes and Fortescue Metals Group 165 million tonnes in fiscal 2016, ending June 30.

http://www.reuters.com/article/australia-hedland-iron-idUSL3N14O0OO

The federal government has come out in support of struggling steel and iron-ore company Arrium after lenders rejected a recapitalisation plan for the company. 

Arrium in February secured $927-million in funding from GSO Capital Partners as part of attempts to restructure and level its debt in a low iron-ore price environment. The funding was to comprise a six-year senior secured term loan of about $665-million and a fully underwritten renounceable prorata rights issue to Arrium shareholders aimed at raising about $262-million. 

As part of the recapitalisation, Arrium would have also sought to obtain secured working capital facilities of about A$500-million. Reducing  its debt of about $2-billion would allow Arrium to retain its mining consumables business, while allowing for the restructure of the steel and mining business units to make them more sustainable. 

Local newspapers report that the lenders have been angered by a lack of consultation from Arrium ahead of the announcement of the GSO offer in February. The proposed package would have given lenders about 55c in the dollar owed. With the lenders voting against the recapitalisation plan, Arrium has gone into a trading halt while it considers its options. 

In the meantime, Industry, Innovation and Science Minister Christopher Pyne said on Tuesday that the government would continue its work on policy levers to give Arrium “every opportunity to transition in this difficult global market”. Pyne pointed out that the government had already reformed anti-dumping laws to address the issue of foreign competition, while bringing forward the purchase of 72 000 t of steel for the Adelaide-Tarcoola rail line. 

Further, the government has also repealed the carbon tax and provided a 100% exemption for emissions intensive, trade exposed industries from the Renewable Energy Target, and has secured an agreement from the state Ministers on the Council of Australian Governments Industry and Skills council to examine the opportunities and challenges of government procurement policies. 

This is an uncertain time for steelworkers in Whyalla and the Australian government stands ready to assist,” Pyne said. South Australian Treasurer Tom Koutsantonis said the state’s Steel Task Force has been speaking to all of the parties involved in the negotiations about Arrium’s future to ensure that Whyalla continues to operate as a steel producer. 

“The workforce at Arrium and their well-being is our number-one priority,” Koutsantonis said. “Both the state and federal governments are working diligently to resolve the current situation so that the steel works at Whyalla and the associated mines can continue to operate.” Koutsantonis noted that the company employed about 7 000 people across Australia and 22 000 around the world, and was a vital national asset.

http://www.miningweekly.com/article/arrium-lenders-shoot-down-927m-bailout-2016-04-05

---

Attached Files

Brazilian miner Vale SA said on Monday it will sell its entire 26.87 percent stake in the struggling CSA steel plant to Germany's ThyssenKrupp for a token value, in a bid to focus on core mining businesses with commodity prices at historic lows.

Vale's announcement confirmed a Reuters report on Friday which said the world's largest iron ore producer was planning to exit the steel venture.

By selling the plant for a purely symbolic amount, Vale will be free of the heavy debts linked to the mill. It will also be entitled to a slice of earnings from any future sale by ThyssenKrupp over a certain period of time, though Vale did not say how long.

The CSA plant cost $10 billion to build and was Brazil's most expensive ever foreign investment project. It reported 2.6 billion euros in total liabilities at the end of the 2015 fiscal year.

Once considered a showpiece for Brazil's steel industry, the mill saw production costs soar amid high inflation, currency volatility and a deep recession.

The plant, which has total production capacity of 5 million tonnes a year, exports slabs that are further processed at ThyssenKrupp's sister plant in Alabama.

The exit from CSA comes as Vale wrestles with the impact of slumping iron ore prices. Chief Executive Officer Murilo Ferreira said in February the firm is looking to sell about $10 billion of assets as it battles to reduce debt.

http://www.reuters.com/article/us-vale-sa-steel-thyssenrupp-idUSKCN0X12B8

---

Attached Files

The Purchasing Managers Index (PMI) for China’s steel industry rebounded to 49.7 in March from 49 from February, posting a 23-month high since May 2014, the fourth consecutive monthly increase, showed data from the China Federation of Logistics and Purchasing (CFLP) on April 1.

While indicating an apparent upturn in China’s steel industry, it was still the 23rd straight month below the 50 threshold, signaling the whole industry was still trapped in the woes.

China’s domestic steel prices climbed in March, driven by low stocks at traders and end users before the Chinese Lunar New Year holidays, and intensive restocking activities and slow production recovery after the holidays.

The output sub-index increased to 49.8 in March from 49.5 in February, the highest in recent 19 months, yet still below the 50 mark for 19 straight months.

The new order sub-index also experienced a four-month rise, hitting 53.3 in March from February’s 509, the highest level since May 2014, indicating continuous rebound of steel demand at domestic market.

While the new export order index decreased 9.3 on month to 36.9, the lowest in recent 14 months, mainly attributed to the narrowing price gap between domestic and overseas products amid weak demand and intensified international anti-dumping activities.

This means that, as the release of production capacity accelerates at steel mills, increased domestic supply and low exports may curb the upward strength of steel prices.

The sub-index for steel products stocks stood at 37.7 in March, down from 44.8 last month. It remained below the 50-point threshold for eight straight months, a result of the nationwide destocking in the steel sector.

Daily crude steel output of key steel mills averaged 1.66 million tonnes in mid-March, up 4.71% from ten days ago, the highest since 2016, according to China Iron and Steel Association (CISA).

The rising crude steel output, mainly due to the expanded production recovery spurred by the rebound of steel prices, may exert pressure on further price increase, analysts said.

Steel products stocks in key steel mills stood at 13.76 million tonnes on March 20, a decline of 5.94% from ten days ago and 20.72% lower than the same period last year, showed the CISA data.

Domestic steel prices are expected to gain further upward strength in April, given the rising demand and low inventories lately observed at domestic market. Yet, the room of growth may be limited due to the potential increase of operation rate at steel mills, constrained exports and stricter macro-control of housing sector at China’s big cities.

http://en.sxcoal.com/0/143845/DataShow.html

---

Attached Files

Japan's crude steel output for April-June will fall 2.4 percent from a year earlier to the lowest for the quarter in seven years, the government said on Tuesday.

That would come as the latest in a series of signals of economic slowdown, clouding the outlook for Prime Minister Shinzo Abe's drive to reflate the economy and spurring calls for more monetary stimulus.

The Ministry of Economy, Trade and Industry (METI) estimated crude steel output would sink to 25.24 million tonnes in April-June, the lowest output for the quarter since 2009 when steel demand was hit hard by the global financial crisis. Against the previous quarter, output is seen falling 3.1 percent, it said, citing an industry survey.

Demand for steel from the construction sector is forecast to slide 3.1 percent from a year earlier, while demand from manufacturing is seen dropping 1.7 percent for the quarter.

"Construction demand for distribution warehouses is fairly solid, but demand for civil engineering and new shops is sluggish," Takanari Yamashita, director of METI's iron and steel division, told a news conference.

"Automobile and electronics segments are likely to see a pick up in demand, but industrial machinery is expected to stay under pressure," he said.

Slack steel demand elsewhere in Asia and anti-dumping steps taken by many countries will drag on exports, while slow demand for energy-related steel products such as drilling pipes in the wake of plunging oil prices will add to pressure, he said.

Demand for steel products, including those for export, is forecast to sink 3.8 percent to 22.91 million tonnes in April-June compared with a year earlier. Steel product exports are expected to decline 6.3 percent.

Asked when the ministry sees a recovery in demand, Yamashita said construction appetite would likely pick up from summer given an expected increase in the number of projects related to the Tokyo Olympics in 2020.

"Although it's not definitive, we expect and hope to see a gradual recovery in demand in and after summer," he said, also citing higher capital expenditure that could bolster industrial machinery demand.

Crude steel output for the financial year ended March 31 is estimated at 104.44 million tonnes, marking the lowest since the 2009 year, according to the ministry.

http://www.reuters.com/article/japan-steel-forecast-idUSL3N1781D3

---

Attached Files