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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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Wednesday, 17 December 14
MARKET INSIGHT - INTERMODAL SHANGHAI, SNP TEAM
As the end of the fourth quarter is approaching, we are all witness to the second hand market prices softening day by day. Any new deal surfacing t ...
Tuesday, 16 December 14
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
Tuesday, 16 December 14
SUB-BIT FOB INDONESIA COAL SWAP CONTINUES ITS FALL
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 1.7 ...
Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
Monday, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
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- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
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