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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, 10 October 14
U.S. PRODUCED 83.2 MMST OF COAL IN SEPTEMBER, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.6 million short tons (mmst) of coal in ...
Thursday, 09 October 14
CAPESIZE MARKET HAS CONTINUED TO SHOW WEAKNESS - FEARNLEYS
Handy
We mentioned last week that after several weeks of rate increase for the Supras, the bigger Panamaxes started to snap up better paying Supr ...
Thursday, 09 October 14
SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. ...
Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
The Dry Bulk market remained under pressure last week, with rates for Capes remaining on the red while those for Panamaxes managed to outperform th ...
Wednesday, 08 October 14
OIL COULD FALL TO USD80 BEFORE SHALE SUPPLY RESPONSE - FITCH
COALspot.com: Brent oil could fall as low as USD80 a barrel before triggering a self-correcting supply response with shale-oil drillers cutting inv ...
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- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Deloitte Consulting - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Planning Commission, India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- PTC India Limited - India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
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