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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, 05 March 15
INDIA WILL BE THE LARGEST DRIVER OF GLOBAL SEABORNE COKING COAL DEMAND GROWTH IN 2015 - WOOD MACKENZIE
Global demand growth will remain weak because of China’s negative demand growth.
COALspot.com: At Coaltrans India, Wood Mackenzie says I ...
Thursday, 05 March 15
BUKIT ASAM BOOKED US$ 1 BILLION REVENUE IN 2014
COALspot.com: Indonesian publicly listed and state owned coal miner PT. Bukit Asam, has announced that, the revenue of the company for the period J ...
Wednesday, 04 March 15
AN AGENDA FOR CHANGE - FITCH INDONESIA CONFERENCE
Fitch Indonesia Conference - 5 March 2015
Fitch Ratings will host its annual Indonesia conference on 5 March 2015.
The theme of this year ...
Wednesday, 04 March 15
KEEP CALM AND INVEST IN DRY - THEODORE NTALAKOS
Keep Calm and Carry On was originally a motivational poster, intended to raise the morale of the British public, produced by the British government ...
Tuesday, 03 March 15
INDONESIAN COAL EXPORT VOLUME TO DECLINE 50% BY 2019
COALspot.com: The Indonesian government is planning to reduce coal export volume by 50% within the next five years while keeping its coal productio ...
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- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Asmin Koalindo Tuhup - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Australian Coal Association
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Aditya Birla Group - India
- White Energy Company Limited
- Central Electricity Authority - India
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- The University of Queensland
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