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