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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, 02 March 15
FOB NEWCASTLE COAL SWAP ROSE 6.89% MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.35 per MT (+6.89%) month over month and US$ 0.40 (0.78%) week on ...
Sunday, 01 March 15
BDI INDEX SLIGHTLY UP CAUSED AN INCREASE IN THE PANAMAX, SUPARAMAX AND HANDY SIZE INDICES
COALspot.com: The freight market saw some gains this week and BDI was up 5.26 pct closed at 540 points. However the Cape index failed to follow BDI ...
Friday, 27 February 15
WEEKLY US COAL PRODUCTION DOWN AN ESTIMATED 14.0% FROM LAST WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 16.5 million short tons (mmst) of coal ...
Thursday, 26 February 15
DRY BULK MARKET COULD REBOUND FROM HISTORICAL LOWS IN THE COMING WEEKS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market could exit from its historical lows in the coming weeks, as Chinese buyers reenter the market after the holiday celebrations. T ...
Thursday, 26 February 15
COAL POLICY RISK: HIGHER ROYALTIES FOR IUP HOLDERS - BAHANA SECURITIES | JAKARTA POST
The Energy and Mineral Resources Ministry plans to raise coal royalties charged to mining operation permit (IUP) holders by the end of the first qu ...
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- Central Electricity Authority - India
- Romanian Commodities Exchange
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Australian Coal Association
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Posco Energy - South Korea
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- MS Steel International - UAE
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- PTC India Limited - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
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