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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, 26 January 15
API 8 CFR SOUTH CHINA COAL SWAP CONTINUE TO SLIDE M-O-M; ROSE W-O-W
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 0.79 (-1.33%) per MT month over month and gained US$ 2.10&nb ...
Sunday, 25 January 15
PANAMAX FREIGHT RATES STILL FALLING
COALspot.com: The BDI was slightly down this week to 720 points. The BDI lost 2.83 pct week on week.
The cape index continued its upward trend ...
Friday, 23 January 15
U.S. WEEKLY COAL PRODUCTION FOR WEEK ENDING JAN. 17 UP 2.5%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.4 million short tons (mmst) of coal ...
Thursday, 22 January 15
PANAMAX: A SOFTER TONE AND OVERALL A SLUGGISH MARKET - FEARNLEYS
Handy
The handy and supra market has experienced yet another week with slow activity and softening rates in both hemispheres, broker Fearnleys AS ...
Thursday, 22 January 15
BUMI RESOURCES POSTS NET INCOME OF $13.3 MILLION 9M-2014
COALspot.com: Bumi Resources, Indonesia’s largest coal miner, reported today that, the company has recorded a net income of $13.3 million for ...
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- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- The Treasury - Australian Government
- Economic Council, Georgia
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Kumho Petrochemical, South Korea
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Australian Coal Association
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Carbofer General Trading SA - India
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
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