• China’s third quarter National Accounts showed the economy grew by its slowest rate since March 2009. From a bulk commodity perspective, key parts of China’s economy remain comparatively weak. Industrial production has slowed in recent months and fixed asset investment has continued to trend down – most notably in manufacturing and real estate.
• Global steel production has continued to increase – rising by 3.4% yoy over the first nine months. Growth remains driven by China, which produced around half the global total.
• The growth in China’s apparent consumption of steel has slowed considerably over 2014, with weaker construction activity a key contributor to this trend. Construction accounted for around 56% of China’s steel consumption in 2013.
• Iron ore markets were mixed in October. From mid-month, prices began to rally, pulling away from five year lows recorded in September, before retreating back to these lows at the end of the month. We expect our hybrid spot & contract price to fall to US$93 a tonne at the end of 2014 and further to US$85 by the end of 2015.
• Metallurgical coal spot prices have continued to track sideways across most of October – a trend that had been evident since mid June – before drifting slightly lower, down to around US$111 at the end of the month. We continue to expect prices to trend back towards US$150 a tonne (for hard coking coal) by the end of 2015.
• Spot prices for thermal coal have continued to decline across October – drifting below US$65 a tonne late in the month (at the port of Newcastle) – the lowest spot price in over five years. Our forecast for contract prices remains unchanged, with prices at US$80 a tonne for the 2015 Japanese financial year (commencing April 2015).

For further analysis download the full report.

• Bulk Commodities Update – October 2014 (PDF, 262KB)