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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, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
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- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- The University of Queensland
- Maharashtra Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- London Commodity Brokers - England
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- GMR Energy Limited - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Makarim & Taira - Indonesia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
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