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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.
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Wednesday, 21 January 15
PANAMAX MARKET MOVED SIDEWAYS OVERALL LAST WEEK - INTERMODAL
COALspot.com: The positive sentiment in which the week prior ended carried on through-out last week as well, the end of which marked the first posi ...
Wednesday, 21 January 15
SHIFT IN INTERNATIONAL COAL TRADE TO THE PACIFIC BASIN WILL CONTINUE - IMF
COALspot.com: The shift in international coal trade to the Pacific Basin will continue, IMF said in its latest Medium-Term Coal Market Report.
...
Wednesday, 21 January 15
MARKET INSIGHT - VASSILIS LOGOTHETIS, INTERMODAL
The World Bank has lowered its forecast for global growth in 2015 to 3% down from its previous level of 3.4% amid rising concerns over the economic ...
Wednesday, 21 January 15
THERMAL COAL PRICE OUTLOOK DEPENDENT ON INDIAN IMPORT DEMAND - MATTHEW BOYLE, CRU
COALspot.com: Supply and demand side developments in India will be an important determinant of future market dynamics and prices for thermal coal a ...
Wednesday, 21 January 15
PORT OF NEWCASTLE COAL EXPORTS JUMP 16.19% ON MONTH TO 15.80 MIL MT IN DECEMBER' 14
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.136 billi ...
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- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Karaikal Port Pvt Ltd - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Economic Council, Georgia
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Planning Commission, India
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Sakthi Sugars Limited - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Minerals Council of Australia
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
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