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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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Thursday, 18 September 14
INDONESIA'S JULY COAL EXPORT VOLUME DROPPED 5.13% M-O-M
COALspot.com: Indonesia, one of the world's largest coal producer and the global leading multi grade coal exporter shipped around $1.65* ...
Thursday, 18 September 14
PANAMAX : US GULF/CHINA FRONTHAUL ARE NOW PAYING TYPICALLY 14.5K + 450K BB - FEARNRESEARCH
Handy
We still see a firming tendency in the Atlantic and it is still ECSA and USG leading on. USG/Cont now up in about USD 17/18k for a Smax whi ...
Thursday, 18 September 14
ELECTRONIC BILLS OF LADING: A GUIDE TO PAPERLESS TRADING WHICH HAS TAKEN THE SHIPPING INDUSTRY BY STORM
Bimco has recently developed and published a charter party clause that specifically addresses the use of electronic bills of lading. Increasing use ...
Wednesday, 17 September 14
PANAMAX: LIMITED INTEREST IN BOTH BASINS; RISING TONNAGE - INTERMODAL
With the week starting off at a fast pace and with the positive momentum from the previous Friday seemingly sticking around for a bit longer, most ...
Wednesday, 17 September 14
SHIPPING MARKET INSIGHT - GEORGE LAZARIDIS
Since the onslaught of 2013 the rising tide of asset prices had been primarily driven by the increasing freight market conditions and the improving ...
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- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Planning Commission, India
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- White Energy Company Limited
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- The University of Queensland
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- ICICI Bank Limited - India
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
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