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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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Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
Wednesday, 19 November 14
SHIPPING MARKET INSIGHT - BY KATERINA RESTIS
The current Ebola outbreak in West Africa has been declared as a worldwide health emergency by the World Health Organization and has had a great im ...
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- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- The University of Queensland
- India Bulls Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Grasim Industreis Ltd - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Ministry of Mines - Canada
- CNBM International Corporation - China
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Thai Mozambique Logistica
- MS Steel International - UAE
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
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