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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, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domes ...
Tuesday, 30 December 14
U.S WEEKLY COAL PRODUCTION ALMOST FLAT AT -0.2%
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Monday, 29 December 14
CHINESE COAL IMPORTS: REGULATORY RISKS? - CLARKSONS
In recent years, Chinese seaborne coal imports have surged, registering average growth of 67% p.a. between 2009 and 2013 to total 265mt. However, t ...
Monday, 29 December 14
BULK MARKET ENDS YEAR ON SOUR NOTE, SHIPBROKER SEES 'BUMPY ROAD AHEAD' - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2014 was supposed to be the year that the dry bulk market would stage a comeback and a sustainable one for that matter. However, while for the most ...
Monday, 29 December 14
Q1'15 CFR SOUTH CHINA COAL SWAP CLOSED AT $59.42
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.51 (-5.58%) month over month and US$ 0.08 (-0.13%) ...
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- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Indika Energy - Indonesia
- PTC India Limited - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Australian Coal Association
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
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