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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, 08 October 14
IS THERE ANY BRIGHT SIDE ON THE DRY BULK SEGMENT? - YANNIS OLZIERSKY
In the movie “Life Of Brian”, a character on a nearby cross was singing the famous “Always look on the bright side of life” ...
Tuesday, 07 October 14
TAIPOWER TO IMPORT 525K MT OF LOW ASH AND EXTRA LOW SULFUR SUB-BITUMINOUS COAL
COALspot.com: Taiwan Power Company intends to procure 525,000 metric tons of low ash and extra low sulfur sub-bituminous coal for Taipower thermal ...
Tuesday, 07 October 14
SUB-BIT FOB INDONESIA COAL SWAP SHOWS A FLAT TO WEAK TREND THIS PAST WEEK
COALspot.com: Indonesian coal swaps November 2014 delivery flat week on week and gained US$ 0.10 (-0.20%) per mt day on day. The swap also lost US$ ...
Tuesday, 07 October 14
THE RIO TINTO CONFIRMS THAT NO DISCUSSIONS ARE TAKING PLACE WITH GLENCORE
COALspot.com: The board of Rio Tinto notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore.The Rio Tinto bo ...
Tuesday, 07 October 14
API 8 CFR SOUTH CHINA COAL SWAP HEADED SOUTH
COALspot.com: API 8 CFR South China Coal swap for delivery in November 2014 decreased US$ 1.10 (-1.64%) month over month and US$ 0.25 (-0.38%) ...
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- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Planning Commission, India
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Australian Coal Association
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- PTC India Limited - India
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Intertek Mineral Services - Indonesia
- Samtan Co., Ltd - South Korea
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Baramulti Group, Indonesia
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
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