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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, 19 March 15
HANDY: INDO COAL CARGOS DESTINED FOR INDIA BEING FIXED IN REGION OF $ 7-8K - FEARNLEYS
Handy
The Handy and Supra market has had a week with mixed signals. Although we see more activity in both hemispheres the rates are only up about ...
Thursday, 19 March 15
INDONESIAN COAL BENCHMARK SOAR 7.69% IN MARCH....!!!
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised up Indonesian coal benchmark prices to US$ 67.76 per MT in March ...
Wednesday, 18 March 15
AVERAGE RATE FOR CAPES MOVED TO BELOW $ 4K/DAY LAST WEEK - INTERMODAL
COALspot.com: The even heavier losses noted in the Capesize segment last week, denied the Dry Bulk market a third weekly positive, while the smalle ...
Wednesday, 18 March 15
PARKING THE CAPES - LINOS KOGEVINAS
It is no secret that recent times have been anything but kind towards shipping, and no sector has suffered more lately than the dry bulk one. While ...
Wednesday, 18 March 15
CHINA-OWNED SHIPS: A RAPID RISE TO BECOME ONE OF THE WORLD'S LARGEST FLEETS - RICHARD SCOTT
Ships operated by owners based in China have become increasingly prominent on the world’s sea routes. China-owned container ships, bulk carri ...
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- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- MS Steel International - UAE
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- ASAPP Information Group - India
- LBH Netherlands Bv - Netherlands
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
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