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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, 12 November 14
PANAMAX: WITNESSED A FAIRLY STABLE MARKET IN THE ATLANTIC
COALspot.com: Despite the fact that the Dry Bulk market noted another weekly increase, clouds of uncertainty returned mid-week onwards, as the mini ...
Wednesday, 12 November 14
SHIPPING MARKET INSIGHT - CHRISTOPHER T. WHITTY
COALspot.com: The fight continues between the low-cost iron ore producers and the big three: Vale, Rio Tinto and BHP Billiton. We are moving into a ...
Tuesday, 11 November 14
FACING CHALLENGES AND MEETING OPPORTUNITIES - INTERNATIONAL EPC CONFERENCE & EXHIBITION
Press Release: SKYCONNECTION and TRANSEVENT, which is fully supported by the Institution of Engineers Indonesia and Ministry of Industry of the Rep ...
Tuesday, 11 November 14
NEWCASTLE COAL SWAP CLOSED AT $ 52.65 FOR Q1' 15 DELIVERY
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery decreased US$ 2.83 (-5.10%) month over month and US$ 1.35 (-2.50%) week ove ...
Tuesday, 11 November 14
PORT OF NEWCASTLE'S OCTOBER COAL SHIPMENTS SLIPPED 7.40% M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,115.7 mil ...
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- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Australian Coal Association
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
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