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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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Sunday, 26 October 14
CAPE'S STRONG PERFORMANCE PUSHES BDI INDEX UPWARDS
COALspot.com: The BDI was up by 26.27 pct and closed at 1192 points week and week. The Cape size performance has pushed up BDI and Cape size index ...
Friday, 24 October 14
WEEKLY U.S COAL PRODUCTION DOWN 2.7% FOR THE WEEK ENDING OCTOBER 18
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.7 million short tons (mmst) of coal in ...
Thursday, 23 October 14
THE BEARS, HOWEVER, STILL CRY; FOR HOW LONG WILL IT LAST? - FEARNLEYS
Handy
"We experience a typical oversupply of ships in the Atlantic which causing rates to slide. In the USG it is just enough cargoes to kee ...
Wednesday, 22 October 14
MARKET INSIGHT - THEODORE NTALAKOS, INTERMODAL
ECO designs - revisited
The ECO vessels are already here but the oil and bunker prices are plummeting to their cheapest level since 2010. Is this ...
Wednesday, 22 October 14
CAPESIZE MARKET REMAINED UNDER PRESSURE
COALspot.com: The Dry Bulk market closed on the red for yet another week although following Friday sentiment has started to improve on the back of ...
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- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- White Energy Company Limited
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Parliament of New Zealand
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Semirara Mining Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
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