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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, 30 August 14
RECOVERY IN SIGHT FOR THE DRY BULK SHIPPING MARKET - DREWRY SHIPPING CONSULTANTS
Despite weak freight rates so far this year, Dry Bulk shipping earnings are forecast to recover as demand for both major and minor bulk commodities ...
Friday, 29 August 14
U.S. WEEKLY COAL PRODUCTION DROPS 1.3 PERCENT, EIA SAYS
COALspot.com – United States the world's second largest coal producer, produced approximately 19.40 million short tons (mmst) of coal in ...
Friday, 29 August 14
ADARO'S PROFITS SINK FURTHER AMID FALL IN COAL PRICES - JP
Adaro Energy, one of the country’s largest coal miners, has reported a 31 percent drop in net profit in the first half of this year as global ...
Friday, 29 August 14
CHINESE LIGNITE IMPORTS: QUANTITY OVER QUALITY? - CLARKSONS
In the first half of 2014, Chinese seaborne coal imports declined 0.4% y-o-y to 148mt, largely reflecting a 3.3% fall in imports of steam coal. Mea ...
Thursday, 28 August 14
PANAMAX: OWNERS CAN GET AROUND USD 16000 FOR A FRONTHAUL; PERIOD MARKET - VERY QUIET - FEARNLEYS
Handy
The activity and sentiment is improving in the Atlantic with the general TA rate is up about US$ 800 w-o-w. We see more South American carg ...
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- Sojitz Corporation - Japan
- MS Steel International - UAE
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Aditya Birla Group - India
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Planning Commission, India
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Central Electricity Authority - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
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