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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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Friday, 14 November 14
MORE NATURAL GAS FROM RUSSIA TO HELP STABILISE CHINA PRICES - FITCH RATINGS
COALspot.com: Fitch Ratings has said possible additional natural gas supplies from Russia's OAO Gazprom to China via the Altai pipeline would h ...
Thursday, 13 November 14
SLOWER AND LOWER HAS BEEN THE TREND OF THE PANAMAX IN BOTH HEMISPHERES - FEARNLEYS
Handy
We are experiencing an oversupply of tonnage in the Atlantic which is out numbering the amount of cargoes, Fearnleys broker says in its lat ...
Thursday, 13 November 14
DRY BULK MARKET'S REBOUND HINGES ON IRON ORE OVERSUPPLY ISSUES MOVING FORWARD - HELLENIC SHIPPING NEWS
“One man’s benefit, is another man’s demise” is a phrase which can be used to describe today’s situation in the dry b ...
Thursday, 13 November 14
COAL MINISTER WANTS INDIA TO STOP COAL IMPORTS IN TWO OR THREE YEARS
COALspot.com: India to ramp up coal production to a billion tonnes by 2019 from its current level of 490 million tones. According to Power and Coal ...
Thursday, 13 November 14
MODERN DRY BULK SHIPS' PRICES START FIRMING UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While the main story of the past few weeks has been the rebound of the dry bulk market, which has been a result of increased Chinese iron ore impor ...
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- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- MS Steel International - UAE
- PTC India Limited - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
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