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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, 24 February 15
IHS ENERGY COAL CONFERENCE OF THE AMERICAS
Attend the IHS Energy Coal Conference of the Americas 17-19 March in Cartagena, Colombia and learn about timely concerns in today's coal indust ...
Monday, 23 February 15
Q2' CFR SOUTH CHINA COAL SWAP FOR Q2 ROSE 3.39% M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery rose US$ 1.90 (+3.39%) per MT month over month and declined US$ 0.08 ...
Monday, 23 February 15
Q2' API 5 FOB NEWCASTLE COAL SWAP CLOSED $1 HIGHER THAN Q3
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 3.12 per MT (+6.44%) month over month and fall US$ 0.43 (-0.83%) w ...
Sunday, 22 February 15
THE BALTIC DRY INDEX LOST ALMOST 3.2% OR 17 POINTS WEEK ON WEEK
COALspot.com: The Baltic Dry Index, one of the economic indicators that monitors the health of the world's economy by tracking the price of shi ...
Friday, 20 February 15
GOVT SET TO INCREASE COAL OUTPUT TARGET THIS YEAR - JAKARTA POST
The Energy and Mineral Resources Ministry is planning to increase its coal output target this year as the government seeks to offset the ongoing de ...
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- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Posco Energy - South Korea
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Parliament of New Zealand
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Savvy Resources Ltd - HongKong
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Australia Pty. Ltd.
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
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