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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, 29 December 14
SGX'S FOB NEWCASTLE COAL SWAPS IMPROVED W-O-W, LOST M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.44 per MT (-2.73%) month over month and gained US$ 0.36 (+0.71%) ...
Friday, 26 December 14
SHIPS FACE LOWER SULPHUR FUEL REQUIREMENTS IN EMISSION CONTROL AREAS FROM 1 JANUARY 2015 - IMO
Ships trading in designated emission control areas will have to use on board fuel oil with a sulphur content of no more than 0.10% from 1 January 2 ...
Wednesday, 24 December 14
CAPE DEMAND WAS STILL EXTREMELY SOFT THIS PAST WEEK ACROSS BOTH BASINS - INTERMODAL
COALspot.com: The performance of the Dry Bulk market, which found itself in desperate search of support for yet another week, has left very little ...
Wednesday, 24 December 14
MARKET INSIGHT - JOHN N. COTZIAS, INTERMODAL SNP BROKER
The year is coming to an end, and we should be able to assess if this was a good year, a bad year, or even a lousy one? The answer clearly de ...
Tuesday, 23 December 14
Q1'15 FOB INDONESIA COAL SWAP GAINED 48 CENTS IN ONE WEEK
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month and gained week over week and day on day.
The Q1 swap has lo ...
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- Africa Commodities Group - South Africa
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Directorate General of MIneral and Coal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Australian Coal Association
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- PTC India Limited - India
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Agrawal Coal Company - India
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Sical Logistics Limited - India
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Ceylon Electricity Board - Sri Lanka
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