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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, 10 February 15
IRON ORE MARKET TO REMAIN OVERSUPPLIED IN 2015: PRICE FORECAST $70/T - WOOD MACKENZIE
COALspot.com: With January witnessing the price of iron ore falling to its lowest levels since May 2009, Roger Emslie, Principal Metals & ...
Tuesday, 10 February 15
SUB-BIT FOB INDONESIA COAL SWAP ADVANCES 3.79% WEEK ON WEEK
COALspot.com: Indonesian coal swaps for delivery Q2' 2015 rose week over week and month on month.
The Q2 swap up US$ 0.85 (+1.81%) month o ...
Tuesday, 10 February 15
FOB NEWCASTLE COAL SWAPS SURGE WEEK OVER WEEK, RAISING HOPES?
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery rose US$ 0.95 per MT (+1.91%) week over week and declined US$ 0.06 (-0.12%) ...
Monday, 09 February 15
AUSTRALIAN COAL PRODUCERS BEST POSITIONED IN OVERSUPPLIED MARKET; US MINES MOST AT RISK - WOOD MACKENZIE
In a 2015 global coal outlook report, Wood Mackenzie says that Australia and Indonesian coal suppliers will see some upside in the difficult months ...
Monday, 09 February 15
FOB RICHARDS BAY COAL SWAP GAINS 3.65% TO ONE-MONTH HIGH
COALspot.com: API 4 FOB Richards Bay Coal swap for delivery Q2' 2015 surge month over month and day on day.
The Q2 swap has soared US$ 2.1 ...
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- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Australian Coal Association
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Parliament of New Zealand
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Global Green Power PLC Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
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