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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, 07 November 14
U.S. PRODUCED 85.60 MILLION SHORT TONS OF COAL IN OCTOBER, UP 2.88% M-O-M
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.0 million short tons (mmst) of coal ...
Thursday, 06 November 14
THE ATLANTIC HAS REMAINED STRONG WITH A HEALTHY SUPPLY OF NEW CARGOES
Handy
This week has continued its slow trend in both hemispheres and even though rates are a bit up w-o-w it is not a clear sign for any improvem ...
Wednesday, 05 November 14
CAPESIZE SEGMENT ENJOYED FIRMING RATES ACROSS BOTH BASINS
Following a fantastic week in terms of rate performance for Capes, the Dry Bulk market managed to note another positive weekly closing, which stron ...
Wednesday, 05 November 14
SHIPPING MARKET INSIGHT - PANOS TSILINGIRIS
COALspot.com: The steep appreciation in dry bulker values between late 2012 and March 2014 resulted in unrealistically expensive ship values compar ...
Tuesday, 04 November 14
INDONESIAN COAL SWAPS FOR 2015 DELIVERIES SHOW A WEAK TREND
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost month on month and gained day on day and week on week, the trend was same as las ...
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- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- The University of Queensland
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
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