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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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Tuesday, 10 March 15
OIL PRICE FORECASTING - IGNORE THE EXPERTS: COLIN MARSHALL
KNOWLEDGE TO ELEVATE
Experts put themselves on a pedestal, making claims to have special forecasting abilities for oil price trends. They, too ...
Tuesday, 10 March 15
FOB NEWCASTLE COAL SWAPS HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 0.24 per MT (-0.47%) month over month and US$ 1.52 (-2.93%) we ...
Tuesday, 10 March 15
CFR SOUTH CHINA POWER-STATION COAL SWAPS DECLINE
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery fell US$ 0.42 (-0.74%) per MT month over month and declined US$ 1.00 &nbs ...
Monday, 09 March 15
INDONESIA GREETS INDIA RATE CUT AS GOOD FOR EXPORTS - GLOBEASIA
Indonesian commodity producers and economists have hailed the Indian central bank’s rate cut as good for boosting exports from Southeast Asia ...
Monday, 09 March 15
CHINA'S SUPREME COURT ISSUES NEW JUDICIAL INTERPRETATION ON SHIP ARREST AND JUDICIAL SALE OF SHIPS - GARD
KNOWLEDGE TO ELEVATE
China is not traditionally a popular jurisdiction for ship arrest. However, Members and clients with ships calling at por ...
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- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Australian Coal Association
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
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