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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, 05 January 15
CFR SOUTH CHINA COAL SWAPS GAINED WEEK OVER WEEK, SGX DATA SHOWS
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 2.50 (-4.02%) month over month and gained US$ 0.20 ( ...
Monday, 05 January 15
FIVE ENERGY SURPRISES FOR 2015: THE POSSIBLE AND THE IMPROBABLE - KURT COBB
The coming year is likely to be as full of surprises in the field of energy as 2014 was. We just don't know which surprises! I am not predictin ...
Monday, 05 January 15
THE SHIPPING MARKET IN 2014 AND LOOKING FORWARD - BIMCO
2014 started with plenty of optimism for a considerably better global economy and an improved shipping market. Things turned out somewhat different ...
Monday, 05 January 15
API 5 FOB NEWCASTLE COAL SWAP FOR Q1'15 DELIVERY CLOSED US$ 0.45 HIGHER COMPARED TO Q2'15 CLOSING
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 0.60 per MT (-1.15%) month over month and gained US$ 0.02 (+0.04%) ...
Sunday, 04 January 15
BALTIC DRY INDEX CONTINUES ITS DECLINE IN 2015
Wish you all a very Happy New Year 2015. The last report was dated 19th Dec 2014 and due to Christmas and new year holidays no reports were publish ...
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- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- The University of Queensland
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- Tamil Nadu electricity Board
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- PTC India Limited - India
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
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