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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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Saturday, 27 September 14
MORE COAL MINERS AGREE TO AMEND CONTRACTS - THE JAKARTA POST
The Energy and Mineral Resources Ministry is in a rush to beat a deadline for the conclusion of numerous memorandums of understanding (MoUs) with t ...
Friday, 26 September 14
INDIA SUPREME COURT RULING TO HIT STEEL, UTILITY EARNINGS, SAYS FITCH
COALspot.com: The 24 September Supreme Court of India (SCI) decision to cancel almost every coal block allocation since 1993 will have a negative f ...
Friday, 26 September 14
U.S WEEKLY COAL PRODUCTION FELL 1.8% WEEK OVER WEEK, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.80 million short tons (mmst) of c ...
Friday, 26 September 14
ORACLE SIGNS EPC FRAMEWORK AGREEMENT WITH SEPCO FOR COAL MINE AND POWER PLANT IN PAKISTAN
COALspot.com: Oracle Coalfields PLC, the UK developer of a lignite coal mine and power plant in the south-eastern Sindh Province, Pakistan, has ann ...
Friday, 26 September 14
NEWCASTLMAXES ARE THE MOST SOUGHT AFTER VESSELS BY SHIP OWNERS TODAY SAYS VESSELS VALUE
KNOWLEDGE TO ELEVATE
Determining a ship’s fair value can be a very tricky business, especially when you’re the one paying. As such ...
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- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Bhoruka Overseas - Indonesia
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Australian Coal Association
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- London Commodity Brokers - England
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
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