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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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Monday, 06 October 14
' COAL-BY-WIRE' FROM SUMATRA TO JAVA - THE JAKARTA POST
Coal from the island of Sumatra accounts for most of Indonesia’s low-grade lignite, a low-quality coal that receives a poor price in internat ...
Monday, 06 October 14
THE IRON ORE SHIPPING BUSINESS IS FACING SOME ROUGH SEAS - EAST ASIA FORUM
The impact of Chinese demand on global iron ore prices is well known. A less acknowledged consequence of China’s emergence is the transformat ...
Sunday, 05 October 14
BALTIC DRY INDEX SLIPS 1.14%; BALTIC PANAMAX INDEX GAINED 9.91% WEEK ON WEEK
COALspot.com: The BDI was down by 1.14 pct and closed at 1037 points this Friday.
The Cape index was down significantly week on week or lost 5 ...
Friday, 03 October 14
U.S. WEEKLY COAL PRODUCTION UP 5.8% TO 19.9 MMST
COALspot.com – United States the world's one of largest coal producers, produced approximately 19.9 million short tons (mmst) of co ...
Thursday, 02 October 14
CAPESIZE - DULL AND WITHOUT MUCH DIRECTION AS IRON ORE AND COAL VOLUMES FAIL TO LIVE UP EXPECTATIONS
Handy
After the recent weeks´ rate increase in the Atlantic we see Panamaxes snapping up handymax and Supra cargoes at much lower levels, p ...
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- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Australian Coal Association
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
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