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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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Saturday, 22 November 14
THE FALL IN BUNKER PRICES REDUCE FUEL COSTS SIGNIFICANTLY - BIMCO, PETER SAND
For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as USD 1 million a year if current price level st ...
Saturday, 22 November 14
DRY BULKERS NEWBUILDING DELIVERIES REACHED 11.8 MILLION DWT DURING THIRD QUARTER, NET FLEET GROWTH FOR 2014 TO REACH 5% - HELLENIC SHIPPING NEWS
The dry bulk market has rebounded since its less than impressive performance since the start of the year, but overall, third quarter figures could ...
Friday, 21 November 14
BUMI ENTERS INTO CONDITIONAL SALE & PURCHASE AGREEMENT TO SELL FBS STAKE
COALspot.com: PT Bumi Resources Tbk, one of the Indonesia's largest coal producers confirms that it has executed a Conditional Sale and Purchas ...
Friday, 21 November 14
U.S LAST WEEK'S COAL PRODUCTION STAYS FLAT W-O-W
COALspot.com – United States the world's one of the largest coal producers, produced approximately 18.9 million short tons (mmst) of coal ...
Thursday, 20 November 14
MOST MAJOR ASIAN ECONOMIES TO BENEFIT FROM LOWER OIL - FITCH
COALspot.com: The 25% drop in the price of oil since July is likely to lift economic growth prospects, improve terms of trade, and have a pot ...
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- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Directorate Of Revenue Intelligence - India
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Agrawal Coal Company - India
- Formosa Plastics Group - Taiwan
- Indogreen Group - Indonesia
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Australian Coal Association
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
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