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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, 24 August 14
SEA FREIGHT MARKETS STARTING TO LOOK POSITIVE; CAPES DRIVE FREIGHTS HIGHER
COALspot.com: The freight market has strengthen further this week with BDI up 7.19 pct week on week. The BDI was closed at 1,088 points while the B ...
Friday, 22 August 14
INDIAN IRON ORE ROYALTY RISE NOT LIKELY TO HURT STEELMAKERS' MARGINS - FITCH
Fitch Ratings does not expect an increase in India's iron ore royalty rates to have a major impact on the profitability of steel producers in t ...
Friday, 22 August 14
ARBITRATION CLAUSE IN LOU HELD TO REPLACE CHARTERPARTY ARBITRATION CLAUSE
KNOWLEDGE TO ELEVATE
The Claimants had claims for cargo damage against the vessel Owners arising under four bills of lading. The vessel was th ...
Friday, 22 August 14
ICAP ENERGY LAUNCHES GLOBAL COKING COAL DERIVATIVES TRADING
First contract completed and cleared on CME
COALspot.com: ICAP Energy, the energy business of ICAP plc, announces today that it has successful ...
Friday, 22 August 14
U.S WEEKLY COAL PRODUCTION UP 2.4% WEEK OVER WEEK
COALspot.com – United States the world's second largest coal producer, produced approximately 19.60 million short tons (mmst) of coal in ...
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- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Latin American Coal - Colombia
- VISA Power Limited - India
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- India Bulls Power Limited - India
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Bharathi Cement Corporation - India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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