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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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Sunday, 07 September 14
SHIPMANAGERS SUPERVISION CONTRACT FOR NEWBUILDS - BIMCO
Shipmanagers are frequently called upon by their owner clients to supervise newbuilding projects on their behalf. The scope of the manager’s ...
Saturday, 06 September 14
SLOW COAL EXPORT REGISTRATION RAISES CONCERNS - THE JAKARTA POST
Several coal mining companies have yet to receive the go-ahead from the Energy and Mineral Resources Ministry to obtain exporting licenses, leading ...
Saturday, 06 September 14
DRY BULK MARKET'S PROSPECTS ARE IMPROVING, DESPITE WEAK SECOND QUARTER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been rebounding during the past month, with the Baltic Dry Index (BDI) ended the week on a high note, reaching 1,155 points ...
Saturday, 06 September 14
INDONESIA WANTS TO REGULATE COAL DEALS - THE TELEGRAPH INDIA
Indonesia has raised concerns about suspected coal deals struck between overseas buyers and its unregistered domestic miners, the telegraph India r ...
Friday, 05 September 14
U.S. PRODUCED 19.2 MMST OF COAL LAST WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.20 million short tons (mmst) of coal in ...
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- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- White Energy Company Limited
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Formosa Plastics Group - Taiwan
- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Heidelberg Cement - Germany
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- The University of Queensland
- Australian Coal Association
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
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