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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, 20 January 15
INDIA TO SURPASS THE UNITED STATES AND BECOME THE SECOND-LARGEST COAL CONSUMER IN THE WORLD BY 2019 - IMF
COALspot.com: In 2013, coal added more primary energy than any other fuel and was the fastest-growing fossil fuel, enhancing its position as the se ...
Tuesday, 20 January 15
INDONESIAN COAL OUTPUT SEEN RISING, DESPITE FALL IN ITS PRICE
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week, but Indonesian Coal Output Seen Rising. T ...
Tuesday, 20 January 15
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY DECLINED 2.83% M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery declined US$ 1.45 per MT (-2.83%) month over month and US$ 0.50 (-0.99%) we ...
Monday, 19 January 15
HBA FALL TO FRESH LOWS; COAL OVERSUPPLY WILL CONTINUE TO PUSH PRICE DOWN
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down Indonesian coal bench mark price this month to US$ 63.84. T ...
Monday, 19 January 15
CFR SOUTH CHINA COAL SWAPS REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery declined US$ 3.37 (-5.63%) per MT month over month and US$ 0.74 (-1.29%) ...
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- Africa Commodities Group - South Africa
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Sojitz Corporation - Japan
- Ambuja Cements Ltd - India
- PTC India Limited - India
- Central Electricity Authority - India
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- The University of Queensland
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
- GMR Energy Limited - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Directorate Of Revenue Intelligence - India
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