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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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Monday, 02 February 15
INDONESIA'S ADARO ENERGY PRODUCED 56.21 MILLION TONNES OF COAL IN 2014; UP 8% Y-O-Y
COALspot.com: PT. Adaro Energy, Indonesia’s largest coal producer, has increased coal production by 8% to 56.21 million tonnes (Mt) from both ...
Monday, 02 February 15
API 8 CFR SOUTH CHINA COAL SWAP PICKS UP W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.81 (-1.36%) per MT month over month and gained US$ 0.18&nb ...
Monday, 02 February 15
SOUTH KOREA'S KOMIPO INVITES BIDS FOR 280K MT OF SUB-BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender to buy total 280,000 MT of Sub-bituminous coal coa ...
Sunday, 01 February 15
INDONESIA-TO-INDIA COAL FREIGHT RATES REMAIN WEAK NEXT WEEK
COALspot.com: The BDI continued its fall reached lowest levels since 1986 this week.
The BDI declined 15.55 pct to 608 points on Friday 30, Ja ...
Friday, 30 January 15
CONTANGO AND TANKERS - SKULD
KNOWLEDGE TO ELEVATE
Like an invitation to a dance, the word contango may have some people flustered, but for tanker owners this market phenome ...
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- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kaltim Prima Coal - Indonesia
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Sindya Power Generating Company Private Ltd
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- VISA Power Limited - India
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- The Treasury - Australian Government
- PTC India Limited - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
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