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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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Sunday, 15 February 15
BALTIC DRY INDEX CONTINUALLY DIPPED IN RED
COALspot.com: The Baltic Dry Index continues its decline and fell 5.18 pct to 530 points week on week due to falling commodity prices and declining ...
Saturday, 14 February 15
SHALE GAS AND TIGHT OIL ARE COMMERCIALLY PRODUCED IN JUST FOUR COUNTRIES - EIA
KNOWLEDGE TO ELEVATE
The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing com ...
Friday, 13 February 15
U.S. WEEKLY COAL PRODUCTION SHOWS 10% DECLINE
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.1 million short tons (mmst) of coal ...
Friday, 13 February 15
SMALL AND MEDIUM-SIZED SHIP OWNERS SQUEEZED OUT OF THE MARKET ON CRASHING DRY BULK MARKET AND EUROZONE CRISIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Financing issues have started to tighten the noose in the throats of small and medium-size ship owners, who were already facing problems over the p ...
Thursday, 12 February 15
CAPESIZE: THE BEST DESCRIPTION FOR THE MARKET IS, FLAT - FEARNRESEARCH
Handy
The handy and supra market is also being affected by the marginal volume of activity in the commodity sales. We see a small upturn in the T ...
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- Sindya Power Generating Company Private Ltd
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Australian Coal Association
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- The University of Queensland
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
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