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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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Wednesday, 13 August 14
WEEKLY MARKET INSIGHT - KONSTANTINOS KONTOMICHIS SNP BROKER
Being at the peak of the holiday season, August is, as usual, the quietest month in terms of snp transactions, yet it is also a time very critical ...
Wednesday, 13 August 14
WHAT DOES PROJECT CARGO REALLY MEAN TO INSURERS?
KNOWLEDGE TO ELEVATE
Richard Kamppari-Baker, claims manager of FP Marine Risks, explains the challenges of project cargo risk assessment from ...
Wednesday, 13 August 14
INDONESIAN COAL PRICE REFERENCE FALL AGAIN CLOSE TO 57 MONTHS LOWS
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price in August. HBA for the month of A ...
Monday, 11 August 14
LARGEST CHINESE TRADE SURPLUS EVER RECORDED IN JULY - BIMCO
China recorded a trade surplus of USD 47.3 billion in July 2014. The record high surplus came on the back of very strong export growth while import ...
Monday, 11 August 14
INDONESIAN THERMAL COAL SWAPS SEEING SOME POSITIVE TREND
COALspot.com: Indonesian coal swaps for average September 2014 increased US$ 0.20 (+0.36%) day on day and US$ 1.30 (+2.41%) per mt week on week. Th ...
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- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- SMG Consultants - Indonesia
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
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