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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, 16 March 15
MAKING THE WORLD GO ROUND - SEABORNE TRADE! - CLARKSONS
Money, or even love if you prefer, are claimed to make the world go round. For the shipping world, however, it’s trade that sets things spinn ...
Monday, 16 March 15
API 5 FOB NEWCASTLE COAL SWAPS: DECLINED
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 2.48 per MT (-4.77%) month over month and US$ 0.93 (-1.84%) we ...
Monday, 16 March 15
CFR SOUTH CHINA THERMAL COAL SWAP DECLINED 3.74% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 2.17 (-3.74%) per MT month over month and US$ 0.67 (-1 ...
Sunday, 15 March 15
BDI DECLINED LESSER THAN 1% WEEK OVER WEEK; INDO-INDIA FIRM
COALspot.com: The most of indices, including bulk dry index were falling this week. The BDI has been down by just 0.53 points and closing at 562 po ...
Saturday, 14 March 15
CAPESIZE DRY BULKERS TO AVERAGE BETWEEN $3,000 AND $9,000/DAY IN THE COMING WEEKS SAYS BIMCO
BIMCO issued its latest short-term estimates for the dry bulk market. For March/May: BIMCO assesses that the Capesize time charter (T/C) average ra ...
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- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- The University of Queensland
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Australian Coal Association
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Planning Commission, India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- TeaM Sual Corporation - Philippines
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