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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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Friday, 13 March 15
U.S. COAL PRODUCTION UP 2.3% WEEK OVER WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.5 million short tons (mmst) of coal ...
Friday, 13 March 15
ADARO RECORDED A 7% INCREASE IN EBITDA OF $877 MILLION IN 2014
“Coal market continues to be difficult and challenging” – Adaro Energy
The world’s Top 5 thermal coal exporter, ...
Thursday, 12 March 15
CAPESIZE : ACTIVITY IS LOW; PANAMAX: BIT MORE ACTIVITY; HANDY: A FIRMING WEEK
Handy
It has been a firming week in both hemispheres this week and especially in the Pacific, says Fearnleys AS in its week's week report.
...
Thursday, 12 March 15
COAL MINERS REMAIN UNDER PRESSURE AS GLUT CONTINUES - THE JAKARTA POST
Indonesia’s major coal miners reported a significant drop in their earnings last year as the sharp drop in the global demand, mainly from Chi ...
Thursday, 12 March 15
FOB INDONESIA COAL SWAP DROP TO $47.33 A TON IN THE WEEK ENDED MAR.6
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 drop month on month and week over week.
The Q2 swap fell US$ 0.37 (0.78%) month ...
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- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Planning Commission, India
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Riau Bara Harum - Indonesia
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
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