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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, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
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- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- The University of Queensland
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Planning Commission, India
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- PTC India Limited - India
- Meralco Power Generation, Philippines
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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