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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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Tuesday, 16 September 14
INDONESIAN GOVERNMENT DECLARED HBA SUFFERED ANOTHER SETBACK IN SEPTEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in September. HBA for ...
Tuesday, 16 September 14
INDONESIAN COAL OUTPUT WON'T EXCEED 421M TONS: GOVT - JP
The government is optimistic that it will meet its coal production target for this year, which caps nationwide production at a flat number compared ...
Monday, 15 September 14
CHINA'S COAL PROPOSALS LEAVE SOME HOPE FOR EXPORTERS - DAILY NEWS
When the best thing you can say about new policies is that they aren’t as bad as they could have been, then you know your industry is in deep ...
Monday, 15 September 14
SUB-BIT FOB INDONESIA COAL SWAP, JANUARY 2015 DELIVERY GAINED DAY ON DAY AND WEEK ON WEEK
COALspot.com: Indonesian coal swaps for average October 2014 increased US$ 0.40 (+0.78%) day on day and US$ 0.55 (+1.08%) per mt week on week. The ...
Monday, 15 September 14
CFR SOUTH CHINA COAL SWAP GAINED DAY ON DAY AND WEEK ON WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 2.30 (-3.36%) month over month, but increased day on day a ...
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- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- White Energy Company Limited
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Sical Logistics Limited - India
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Agrawal Coal Company - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
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