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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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Friday, 19 December 14
HOW WILL LOWER BUNKER PRICES AFFECT THE SUBSTANTIAL OVERCAPACITY IN DRY BULK MARKET? - BIMCO
As bunker fuel costs have come down from USD 600 per tonnes to USD 330 per tonnes in the past 6 months, much talk about increased ship speed have s ...
Friday, 19 December 14
U.S WEEKLY COAL PRODUCTION REACHED APPROXIMATELY 19.8 MMST; UP 1.0% WOW
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.8 million short tons (mmst) of coal ...
Friday, 19 December 14
HANDY: SOFTER TONE; PANAMAX: QUIET WEEK; CAPESIZE; PAINFUL WEEK
Handy
A softer tone for rates and volumes for the Supras, perhaps less apparent in the Pacific the last week before the season holidays and good ...
Thursday, 18 December 14
INDONESIA TO REVISE UP COAL OUTPUT TARGET TO 460 MILLION TONS IN 2015
COALspot.com: Indonesian government has revised up its next year coal output forecast to 460 million tons from its previous forecast of 421 million ...
Wednesday, 17 December 14
CAPES RATES SLIPPED BELOW $5,600/DAY, FELL 84% YOY
COALspot.com: In the very rare occurrence when the BCI stands below the BDI, words to describe market sentiment are probably poor, said Intermodal ...
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- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- MS Steel International - UAE
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Planning Commission, India
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Tamil Nadu electricity Board
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The University of Queensland
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
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