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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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Friday, 08 August 14
U.S PRODUCED 35.80 MMST OF COAL IN JULY; UP 7.89 MONTH OVER MONTH
COALspot.com – United States the world's second largest coal producer, produced approximately 19.50 million short tons (mmst) of coal in ...
Friday, 08 August 14
PORT OF NEWCASTLE SHIPPED 19.52% MORE COAL IN JULY FROM LAST MONTH
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped 14,036,947 t ...
Thursday, 07 August 14
SHORT-TERM COAL OUTLOOK IMPROVES - SAM QUEST
With demand for and supply of coal to grow in the near future, prices are expected to rebound in the short term; the long-term prospects, however, ...
Thursday, 07 August 14
BULKING UP IN AFRICA: CHINA INFLATES SEABORNE MINERALS EXPORT TRADE - RICHARD SCOTT
Africa’s profile as an exporter of dry bulk commodities is rising. Responding to growing import demand from China, India and other buyers in ...
Wednesday, 06 August 14
CAPES: BUSINESS INTEREST REMAINS SOFT; CURRENTLY NO SIGNS OF IMPROVEMENT - INTERMODAL
COALspot.com: Despite the considerable pressure witnessed in the freight market for most of the size segments, the Dry Bulk Index was able to note ...
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- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Semirara Mining Corp, Philippines
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- White Energy Company Limited
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
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