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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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- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Australian Coal Association
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Indogreen Group - Indonesia
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- The University of Queensland
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
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