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