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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, 17 October 14
INTERNATIONAL COAL PRICES ARE AT LOWEST LEVEL; COAL STOCKS AT INDIAN POWER PLANTS ARE ALSO AT LOWEST LEVEL
International coal prices as well as coal freights are falling and reaching to its lowest levels. According to PTI, fuel stockpiles at the thermal ...
Friday, 17 October 14
U.S. COAL PRODUCTION UP BY 3.6% WEEK - ON - WEEK
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.20 million short tons (mmst) of coal in ...
Friday, 17 October 14
DRY BULK SHIPPING'S OUTLOOK NOW SHIFTING TO A LESS PROMISING ONE, SHIP PRICES EXPECTED TO FOLLOW SOON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
China’s and other Asian countries’ return to the dry bulk market last week, didn’t trigger the hoped support towards the dry bulk ...
Thursday, 16 October 14
KOREA MIDLAND POWER TO BUY 490K MT OF LCV COAL FOR 1Q 2015
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International open bidding for 490,000 Metric Tons (MT) of LCV (Sub) Bitumino ...
Thursday, 16 October 14
PANAMAX OWNERS RECEIVE A PREMIUM FOR GOING TO INDIA VIA INDONESIA - FEARNLEYS AS
Handy
The Handy/Supra market continues to slide in both hemispheres, said Fearnleys AS in its latest week report. In the Atlantic we see rates co ...
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- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Australian Coal Association
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Planning Commission, India
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
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