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Tuesday, 16 December 14
THIS PRICE IS A STEAL - EVA TZIMA
 COALspot.com: Despite concerns that the slowdown of the Chinese economy would affect imports of iron ore, it seems that this has not been the case so far. The Chinese have been importing record volumes of iron ore throughout the year, taking advantage of softening prices, which touched their lowest level in five years a few days ago. Firm supply from Brazil and Australia has also supported this trend. Both producers, with a combined global market share of over 70%, have been steadily increasing their production post 2000, mainly guided by the mandate of accelerating Chinese appetite.
The boom of economic development in China has in turn made the country “the gift that keeps on giving” for mineral exporters across the globe. Big iron ore producers have been speeding up their sup-ply post 2000, mainly relying on what seemed as a race by China to match its infrastructure with its growth, but somewhere along the lines the fact that the gradual westernization of China, would at some point translate into deceleration of steel consumption was probably overlooked by the market, which brings us to today.
The growth of steel consumption in the country turned red for the first time in over two decades. The slowdown in property construction has quickly curbed the domestic need for steel and consequent-ly iron ore to a significant degree, which translated to excess production of steel as well as increasing iron ore stockpiles. In turn prices for both commodities started sliding, kick starting a vicious cycle of downward pressure.
From one hand, iron ore production was not tamed by the big ex-porters in order to support prices. As big miners in both Australia and Brazil have designed their production capacity around an economy of scale model, cutting down their production to match softening demand growth has not been an option to them, while this also gave them the means to start squeezing the bottom line of their Chinese competitors. At the same time, the Chinese themselves remained buyers of iron ore, enticed by the new attractive price levels they have long desired, with local steel producers remaining active de-spite the fact that domestic demand had started to scale back significantly. That led to surging exports, with cheap Chinese steel flooding the markets, further weighing on global prices.
In both iron ore and steel markets the prospects remain dim, with no evidence suggesting that a reversal is imminent. November was the second lowest month of the year in terms of Chinese iron ore imports, while the country’s exports of steel surged to a record high. Exhausting the stallion of the developing economies in the “becoming a developed country” race, means that in the not so distant future, China could see its growing appetite for growth linked commodities squeezed further. It is often said lately that India or other developing economies could step up to fill in the demand gap created by China, but let’s not forget that history doesn’t always repeat itself.
The truth is that the world in which China emerged as the big economy it currently is, is a very different place today. Developing economies nowadays cannot rely on developed ones to accelerate their growth in the same degree they used to, as most of the latter still struggle themselves with ailing growth, while at the same time and even most importantly, the belief that free trade is always affected during periods of economic crisis is becoming more evident these days. India has persistently tried to promote the “Make in India” and although the policy has met little success so far, Prime Minister Modi has made the idea of stop relying on imports for some of the most important commodities and start using domestic reserves, his personal goal.
My opinion is that more countries will try to protect their domestic production amidst evidence that the path out of the economic crisis now appears longer than what we originally thought it would be. In doing so, they will have to allow for ample room for protectionism measures to be applied, setting limits on quantity and/or price of imports, in order to support domestic production instead, which is exactly the opposite of what the extrovert in nature shipping industry needs.
Eva Tzima
Research Analyst
Compiled by:
Intermodal Research & Valuations
About the Author
Eva Tzima has experience of more than a decade as a financial analyst and has focused on the shipping industry through private equity projects as well as maritime stock analysis. Since 2012 she has been working as a Research analyst at Intermodal Shipbrokers Co., where she currently holds the position of Head of Research, focusing in the specific analysis of the SnP, Newbuilding and Demolition markets across the Dry Bulk, Tanker, Container and Gas Carrier sectors.
Previous to her current post she worked as an investment manager for a privately owned portfolio and in Trafalgar Asset Managers Ltd in London, mainly focusing in Private Equity Projects in the shipping, energy and aircraft sectors, as well as in Primary and Secondary Debt investments. During her employment in Trafalgar she acted as a director across a number of boards of entities affiliated to Trafalgar.
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Information contained within the website of COALspot.com is intended for informational purposes only and is not intended as professional counsel and should not be used as such.
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Thursday, 26 March 15
KYUSHU ELECTRIC POWER OF JAPAN HAS JOINED GLOBALCOAL ONLINE COAL TRADING PLATFORM
globalCOAL® announced today that Kyushu Electric Power, one of Japan’s largest utility companies, has joined its online coal trading plat ...
Wednesday, 25 March 15
MARKET INSIGHT: TANKER CHARTERING - KATERINA RESTIS
The 1st of January 2015, as broadly reported, denoted the beginning date of new and progressive emission regulations for vessels operating within t ...
Wednesday, 25 March 15
AUSTRALIA SET TO ONCE AGAIN BE THE WORLD'S LARGEST COAL EXPORTER - COAL, MINERALS COUNCIL OF AUSTRALIA
Greg Evans, Executive Director - Coal, Minerals Council of Australia
Media Release: The latest Resources and Energy Quarterly published by the ...
Wednesday, 25 March 15
AUSTRALIA UPSTREAM ENERGY FIRMS FACE RISING OIL PRICE EXPOSURE - FITCH
Fitch Ratings says the Australian oil and gas companies involved in exploration and production face higher exposure to oil price-linked revenues, w ...
Wednesday, 25 March 15
2014 : UK COAL IMPORTS DECLINED 17%; GERMANY COAL IMPORTS UP 6%
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
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- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- Edison Trading Spa - Italy
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Agrawal Coal Company - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
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