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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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Monday, 23 March 15
CFR SOUTH CHINA COAL SWAP: Q3 DELIVERY HAS FALLEN 7.93% MONTH-ON-MONTH
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 4.09 (-7.06%) per MT month over month and US$ 2.00 (-3 ...
Monday, 23 March 15
SEABORNE WORLD COAL TRADE: GROWTH +5% - GERMAN COAL IMPORTER ASSOCIATION
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Sunday, 22 March 15
DRY BULK RATES CONTINUED TO RISE THIS WEEK
COALspot.com: The freight market was steady this week as all the segments increased after many weeks of weak trend.
The Baltic Dry Index (BDI) ...
Friday, 20 March 15
HARD COAL MARKET 2014: DESPITE THE ENERGY TURNAROUND, HARD COAL IMPORTS TO GERMANY RISE BY MORE THAN 6% (PART 1)
Hard Coal Market 2014: Despite The Energy Turnaround, Hard Coal Imports To Germany Rise By More Than 6%, Although Hard Coal-Fired Power Generation ...
Friday, 20 March 15
U.S. WEEKLY COAL PRODUCTION SHOWS 5.9% INCREASE WEEK OVER WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.5 million short tons (mmst) of coal ...
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- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- The University of Queensland
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- GMR Energy Limited - India
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