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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, 11 August 14
SGX CFR SOUTH CHINA COAL SWAPS DIRECTION HEADING TO NORTH
COALspot.com: API 8 CFR South China Coal swap for delivery in September 2014 increased US$ 0.50 (+0.74%) day on day and US$ 1.55 (+2.33%)&nbs ...
Monday, 11 August 14
A TALE OF TWO TRADES - EVA TZIMA
COALspot.com: It has without a doubt been “a cruel, cruel summer” for the Dry Bulk market so far and with second hand values still stan ...
Sunday, 10 August 14
FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com: This week the BDI and other segments saw some improvements. The BDI increased by 3.46 pct week on week and closed at 777 points.
...
Friday, 08 August 14
MINING DISPUTE IS CRIPPLING LOCAL ECONOMIES IN EASTERN INDONESIA - JG
- By Iwan Harsono -
It seems as if there’s no end in sight to the series of negotiations between the government and mining companies about ...
Friday, 08 August 14
CAPESIZE RATES ARE REMAINING MORE OR LESS UNCHANGED AT BOTTOM LOW LEVELS - FEARNLEYS AS
Handy
An improving sentiment with stronger rates and fair demand for prompt tonnage in the Atlantic, both on the Continent and in the Med for the ...
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- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Uttam Galva Steels Limited - India
- Indogreen Group - Indonesia
- White Energy Company Limited
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Australian Coal Association
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- The University of Queensland
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
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