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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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Tuesday, 21 October 14
INDIA'S DIESEL DEREGULATION POSITIVE FOR OIL COMPANIES - FITCH
The Indian government's 18 October decision to deregulate diesel prices will have a positive effect on the national oil marketing companies tha ...
Tuesday, 21 October 14
LOW DEMAND PUTTING COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost on day, week and month.
The swap has lost US$ 1.57 (-3.04%) month on month ...
Monday, 20 October 14
CHINA'S ENVIRONMENTAL POLICIES DO NOT SPELL THE END FOR COAL - WOOD MACKENZIE
China's environmental policies do not spell the end for coal Analysis across energy commodities show coal still accounting for 64% of power mix ...
Monday, 20 October 14
CFR SOUTH CHINA COAL SWAPS FAILED TO PERFORM POSITIVE
COALspot.com: API 8 CFR South China Coal swap for Q4’ 2014 delivery decreased US$ 3.04 (-4.57%) month over month and US$ 1.75 (-2.68%) week o ...
Sunday, 19 October 14
LOW DEMAND PUSHES DOWN COAL FREIGHT RATES; VOLATILITY CONTINUES
COALspot.com: This week all the segments softened including BDI except for Panamax index.
The BDI was down by1.70 pct and clsoed at 944 points ...
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- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Posco Energy - South Korea
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- White Energy Company Limited
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
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