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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.
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Thursday, 25 September 14
LACK OF COAL BUSINESS PUSHING DOWN PANAMAX EARNINGS IN PACIFIC
Handy
In the Atlantic we see rates steady climbing upwards. More coal cargoes out of USG and USEC are helping the TA market which is up some USD ...
Wednesday, 24 September 14
ADARO AGREED TO REDUCE ITS CONCESSION AREA TO 31,379.8 HECTARES
COALspot.com: PT Adaro Energy Tbk (Adaro Energy) today announced that, PT Adaro Indonesia (AI), its wholly owned subsidiary, entered into a M ...
Wednesday, 24 September 14
CAPESIZE: ACTIVITY IN BOTH BASINS WAS UNIMPRESSIVE
COALspot.com: The end of the week prior seems to have marked the tone for the days that followed, with the Dry Bulk market giving up a significant ...
Tuesday, 23 September 14
MEDCO TO INCREASE ITS COAL PRODUCTION NEXT YEAR
COALspot.com: PT Medco Energi Internasional is looking to increase its coal production next year, supported by the launch of operations at its Duta ...
Monday, 22 September 14
COAL SECTOR CHAOS - GENESIS TO REVELATION - DIPESH DIPU
COALspot.com: “Let there be light”, intends the government of India but the fuel side of the story paints a blackout. The recent Suprem ...
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- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Planning Commission, India
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- The University of Queensland
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- London Commodity Brokers - England
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
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