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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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Monday, 18 August 14
CFR SOUTH CHINA COAL SWAP PERFORMED WELL THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.45 (+0.66%) day on day and US$ 0.30 (+0.44%)&nbs ...
Saturday, 16 August 14
HIGH DEMAND OF IRON ORE SHIPMENTS PUSHED CAPE INDEX UPWARDS
COALspot.com: This week's freight market was buoyant with Cape and panamax index seeing a big jump pushing the BDI above 1,000 points week on c ...
Friday, 15 August 14
5TH ANNUAL POWER AND ELECTRICITY INDONESIA
5TH ANNUAL POWER AND ELECTRICITY INDONESIA
13-16 October 2014
Grand Hyatt Jakarta, Indonesia
Web Site
The country’s definitive ...
Thursday, 14 August 14
U.S. STEAM COAL IMPORTS REMAIN DOWN SHARPLY FROM HISTORIC HIGH IN 2007, SAYS EIA
COALspot.com: U.S. steam coal imports at power plants have fallen significantly from their peak level of more than 30 million tons in 2007 to less ...
Thursday, 14 August 14
INDIA'S PLAN TO START AN INFRASTRUCTURE BOOM AND TO INVEST US$ 1 TRILLION BY 2017 WILL SURELY AFFECT THE DRY BULK TRADE - FEARNLEYS
Handy
The Atlantic Supra market has continued its improving sentiment with rates climbing and TA´s are now up about US$ 900 w-o-w, said Fea ...
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- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Australian Coal Association
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- The University of Queensland
- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Marubeni Corporation - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Baramulti Group, Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Planning Commission, India
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- PTC India Limited - India
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
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