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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, 01 October 14
ASIAN THERMAL COAL PRICES TO REMAIN WEAK ON OVERSUPPLY - FITCH
COALspot.com: The thermal coal market in Asia will remain oversupplied in the next 12 months, in spite of on-going rationalisation of production, a ...
Wednesday, 01 October 14
PANAMAXES: DEFENSIVE, STRUGGLING TO KEEP ANY FURTHER DECREASES - INTERMODAL
COALspot.com: The Dry Bulk market seemed unable to shake off the trend of the week prior and the BDI remained on a downward slope for the bigger pa ...
Wednesday, 01 October 14
FITCH: GLOBAL ECONOMY FACES MULTI-SPEED RECOVERY, MULTIPLE RISKS
Fitch Ratings says in its latest Global Economic Outlook (GEO) that global growth will pick up in 2015 and 2016, but risks are weighted to the down ...
Tuesday, 30 September 14
COALVIEW TO PARTICIPATE AT MET COKE WORLD SUMMIT 2014 IN CHICAGO
COALspot.com: Coalview Ltd., LLC(“Coalview”) America's leading fully integrated coal technology and fine coal recovery company prov ...
Monday, 29 September 14
INDONESIAN COAL EXPORT VOLUME FALL IN AUGUST
COALspot.com: Indonesia, one of the world's largest coal producers and the global leading multi grade coal exporter shipped around $1.50 ...
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Anglo American - United Kingdom
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Australian Coal Association
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
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