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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, 03 December 14
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The dry bulk market seems unable to turn sentiment round and is still looking for direction. The BCI's 887-point free fall last week had an obv ...
Wednesday, 03 December 14
CAPESIZE DRY BULK CARRIERS ENTER 2015 WITH MIXED FORTUNES, WITH A POSITIVE AND A NEGATIVE SCENARIO BOTH EMERGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future of the Capesize dry bulk market appears to be engulfed from mixed “feelings” among analysts and market participants, despite ...
Tuesday, 02 December 14
KEY PLAYERS SHED NEW PERSPECTIVES ON COAL MARKETS
Press Release: Singapore’s ONLY and longest established Coal Trade event. Whilst Coal prices remain challenging, there is widespread consensu ...
Tuesday, 02 December 14
KOMIPO INVITES BIDS FOR 585,000 METRIC TONS OF COAL FOR Q1'15
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids for the supply of 585,000 Metric Tons of coal. According to invitation, 5700 ...
Tuesday, 02 December 14
U.S WEEKLY COAL PRODUCTION FELL 1.4% WEEK ON WEEK - EIA
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.6 million short tons (mmst) o ...
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- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- The University of Queensland
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Coalindo Energy - Indonesia
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Petron Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Economic Council, Georgia
- Planning Commission, India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Dalmia Cement Bharat India
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