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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, 28 August 14
BANPU REPORTS HIGHER FIRST-HALF YEAR RESULTS FOR 2014
COALspot.com: Banpu Public Company Limited (BANPU) reports higher first half-year financial results for 2014 having its gross profit increasing 3 p ...
Wednesday, 27 August 14
FREIGHT MARKET: IS THE MARKET IN A RECOVERY MOOD? - GEORGE ILIOPOULOS
Is the market in a recovery mood?
August is typically a time when the shipping industry takes it easy… charter-ers book their requireme ...
Tuesday, 26 August 14
4TH ANNUAL ASIA NICKEL
4th Annual Asia Nickel
19-20 Nov 2014
Grand Hyatt Jakarta, Indonesia
Web Site
Asia’s Premier Nickel Conference
Regulation in ...
Tuesday, 26 August 14
DESPITE LOW DRY BULK RATES, BULKER PRICES ARE STILL HIGH - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Traditionally, August tends to be a month of slow activity in the sale and purchasing market and this year has been no exception. However, as shipb ...
Tuesday, 26 August 14
GOVT ON TRACK TO LIMIT COAL OUTPUT - THE JAKARTA POST
The government has announced that it will proceed with plans to cap the production of coal next year, a move aimed not only at protecting the envir ...
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- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Maheswari Brothers Coal Limited - India
- Pendopo Energi Batubara - Indonesia
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Banpu Public Company Limited - Thailand
- Medco Energi Mining Internasional
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- The University of Queensland
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- VISA Power Limited - India
- Indika Energy - Indonesia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
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