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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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Wednesday, 14 January 15
DRY BULK MARKET NOTED ANOTHER WEEKLY DECLINE - INTERMODAL
COALspot.com: The Dry bulk market noted another weekly decline on Friday, with the performance of the Capesize market still weighing down on the re ...
Wednesday, 14 January 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In Oil we trust! The Barrel price has declined by almost a third in comparison to the 2014 January and has being on the downhill since early last s ...
Wednesday, 14 January 15
COMMODITIES AREN'T PRIMED FOR A REBOUND DURING 2015: SHIPPING COULD BENEFIT FROM LOWER PRICES - ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In the recent past, higher commodity prices were driven by an increase in demand from developing countries, which spelled good news for ship owners ...
Wednesday, 14 January 15
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1 DELIVERY CLOSED AT US$ 46.97 PMT
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 declined month on month and week over week.
The Q1 swap has fell US$ 1.53 (-3.15 ...
Wednesday, 14 January 15
Q4' 15 FOB NEWCASTLE COAL SWAP CLOSED 4.51% LOWER COMPARED TO Q1' 15 PRICE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.56 per MT (-3.0%) month over month and US$ 1.03 (-2.0%) week ove ...
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- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- PTC India Limited - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Posco Energy - South Korea
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Krishnapatnam Port Company Ltd. - India
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
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