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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, 31 October 14
BUKIT ASAM'S NET PROFIT ROSE 27.42% FOR THE PERIOD JANUARY - SEPTEMBER 2014
COALspot.com: Publicly listed coal miner Bukit Asam reported solid profits in the first nine months of 2014 year.
Coal miner Bukit Asam manage ...
Friday, 31 October 14
U.S PRODUCED AROUND 19.3 MMST OF COAL IN A WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.3 million short tons (mmst) of coal in ...
Thursday, 30 October 14
COAL & GRAINS SUPPORT PANAMAX AND IRON ORE SUPPORTS CAPES
Handy
The Atlantic market has been flat this week. Rates are up about US$ 200 from last week on the TA´s, but the volumes are about the sam ...
Thursday, 30 October 14
DOES A LOU ARBITRATION AGREEMENT FOR THE UNDERLYING CARGO CLAIM COMPLETELY REPLACE THE BILL OF LADING ARBITRATION CLAUSE? - INCE &CO
KNOWLEDGE TO ELEVATE
In the context of cargo claims brought under four bills of lading, the Commercial Court has recently considered whether a ...
Wednesday, 29 October 14
GOOD REASON WHY Q4 CAPESIZE OUTLOOK WAS SO BULLISH AT START OF THE YEAR - COMMODORE RESEARCH
COALspot.com: There was good reason why so many analysts' capesize outlook for Q4 was so very strong at the start of this year. Brazilian ...
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- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Economic Council, Georgia
- VISA Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- White Energy Company Limited
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Central Java Power - Indonesia
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