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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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Friday, 20 February 15
U.S. PRODUCED AROUND 19.2 MILLION SHORT TONS OF COAL WEEK ON WEEK
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.2 million short tons (mmst) of coal ...
Thursday, 19 February 15
PANAMAX: NOPAC AND AUSSIE ROUNDS ARE DONE IN LOW/MID $ 4000; TRIPS VIA INDONESIA TO INDIA CLOSER TO THE $5000 MARK - FEARNLEYS
Handy
The handy and supra market has not seen any firming rates in front of the Chinese New Year and still suffering on low activity in both hemi ...
Wednesday, 18 February 15
DRY BULK SHIPPING TO RECOVER IN LATE 2015 - DREWRY MARITIME RESEARCH
Strong trade growth, moderating fleet development and deployment of new fuel efficient vessels are expected to lead to a recovery in dry bulk shipp ...
Tuesday, 17 February 15
WHO PAYS THE SUEZ CANAL FEES? - INCE & CO
KNOWLEDGE TO ELEVATE
This was an appeal from an arbitration award on a point of construction in relation to the wording of an addendum to a ch ...
Tuesday, 17 February 15
BUOYANT WAVES IN RECENT YEARS: GLOBAL SHIP INVESTMENT SINCE THE CRASH - HELLENIC SHIPPING NEWS
Anxiety about fleet expansion is a recurring feature of world shipping markets. Within the global maritime community, worries about the vast amount ...
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- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Marubeni Corporation - India
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- PTC India Limited - India
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Baramulti Group, Indonesia
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Planning Commission, India
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
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