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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, 12 January 15
SHIPPING - CHALLENGES AND RESOLUTIONS - EVA TZIMA
Last year has without a doubt been another challenging one both for both our industry and our country. As Greece is currently dominated by election ...
Sunday, 11 January 15
BDI DECLINED 8% ON WEEK; BCI LOST 31%
COALspot.com: The BDI continued its decline in the first week of this year or lost 8 pct week over week. The BDI was closed at 709 points whi ...
Friday, 09 January 15
U.S. EASTERN SPOT STEAM COAL PRICES FELL IN 2014; ROSE IN WEST - EIA
U.S. Eastern spot steam coal prices declined in 2014 compared to 2013 levels because of a decline in steam coal exports.
According to U.S. Ene ...
Friday, 09 January 15
WEEKLY U.S. COAL PRODUCTION UP AN ESTIMATED 2.2% Y-O-Y
COALspot.com – United States the world's one of the largest coal producers, produced approximately 17.6 million short tons (mmst) of coal ...
Thursday, 08 January 15
INDONESIA PRESSES ON WITH HIGHER COAL ROYALTY FEE TO BOOST STATE REVENUE - JG
The Indonesian government is pressing on with its plan to raise the royalty charged to coal miners in order to increase state revenue, but the move ...
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- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Orica Australia Pty. Ltd.
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- The Treasury - Australian Government
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
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