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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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Wednesday, 15 October 14
NEWCASTLE SHIPPED 13.96 MILLION TONS OF COAL IN SEPTEMBER; UP 5.72%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,227.7 wor ...
Tuesday, 14 October 14
KING COAL UNDER ATTACK? - EVA TZIMA
With the last quarter of the year being well underway and with no strong signs that the Dry Bulk market could be ready for a big positive reversal, ...
Tuesday, 14 October 14
THE NEW CHINESE TRANSPORTATION TAX LAW: WHAT DOES IT MEAN FOR GREEK SHIPPING? - DELOITTE
China has recently promulgated a new law which imposes tax on profits from freights of inbound routes. The objective of the new tax law titled &ldq ...
Monday, 13 October 14
CHINESE COAL IMPORT TARIFFS YET ANOTHER BLOW TO AUSTRALIAN COAL EXPORTS - TIM BUCKLEY
COALspot.com: China’s unexpected move to reintroduce thermal coal import tariffs of 6% will have a materially negative impact on the viabilit ...
Monday, 13 October 14
NEWCASTLE COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 54.92, SGX DATA SHOWS
COALspot.com: API 5 FOB Newcastle Coal swap for delivery Q4' 2014 decreased US$ 0.80 (-1.46%) month over month and US$ 0.52 (-0.95%) week over ...
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- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- The University of Queensland
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Ind-Barath Power Infra Limited - India
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Australian Coal Association
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- VISA Power Limited - India
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Dalmia Cement Bharat India
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