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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, 09 March 15
CHINA'S IMPORTS - NEVER MORE IMPORTANT TO SHIPPING? - CLARKSONS
Over the last 15 years China has led maritime forecasters a right old dance. In 2002, rumours that Chinese iron ore imports were about to take off ...
Sunday, 08 March 15
FREIGHT RATES FROM INDONESIA TO INDIA IS TRENDING UP
COALspot.com: The freight market continued to see gains this week and all the indices were rose except for Cape index. The BDI was increased 4.62 p ...
Friday, 06 March 15
BALTIC DRY INDEX: IS THIS POWERFUL INDICATOR SIGNALING A GLOBAL RECESSION? - STREET AUTHORITY
Although memories of the Great Recession linger, a case can be made that better days lie ahead.
That’s because central banks around the ...
Friday, 06 March 15
U.S. WEEKLY COAL PRODUCTION ROSE 3.5% WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.1 million short tons (mmst) of coal ...
Thursday, 05 March 15
PANAMAX : THE ATLANTIC ROUND IS NOW PAYING AROUND US$ 5K PER DAY
COALspot.com: Handy - The activity in the handy/supra segment is back. “ We see more fresh cargo in the market for 2nd half March dates ...
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- Sojitz Corporation - Japan
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Oldendorff Carriers - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- GMR Energy Limited - India
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
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