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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, 12 February 15
DRY BULK OWNERS SCRAP MORE VESSELS, AS MARKET REACHES HISTORICAL LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has reached historical lows this week, with the Baltic Dry Index (BDI) now trading at levels below operating expense levels for ...
Thursday, 12 February 15
INDONESIAN COAL PRICE REFERENCE INCHED DOWN 1.44% IN FEBRUARY
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 62.92 pe ...
Thursday, 12 February 15
NEWBUILDING ORDERING ACTIVITY DRAGS ON, AS OWNERS ARE LOOKING FOR LOWER PRICES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According t ...
Wednesday, 11 February 15
DRY BULK MARKET REMAINED UNDER PRESSURE : STABILIZING CAPE MARKET HARDLY HELPED SENTIMENT
COALspot.com: The Dry Bulk market remained under pressure last week, while the stabilizing Cape market hardly helped sentiment.
Greece based s ...
Wednesday, 11 February 15
BDI HITTING THE ALL-TIME LOW; FFA MARKETS NOT SHOWING ANY POSITIVE SIGNS
With the BDI hitting the all-time low and with FFA markets not showing any positive signs for a possible recovery in the near future, pessimism is ...
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- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- The State Trading Corporation of India Ltd
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- PTC India Limited - India
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Planning Commission, India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
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