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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, 17 December 14
MARKET INSIGHT - INTERMODAL SHANGHAI, SNP TEAM
As the end of the fourth quarter is approaching, we are all witness to the second hand market prices softening day by day. Any new deal surfacing t ...
Tuesday, 16 December 14
FOB RICHARDS BAY COAL SWAP FOR Q2' 15 DELIVERY CLOSED AT US$ 65.60 PMT
COALspot.com: API 4 FOB Richards Bay Coal for delivery Q1' 2015 lost month on month.
The Q1 swap has lost US$ 0.18 (-0.27%) month on month ...
Tuesday, 16 December 14
SUB-BIT FOB INDONESIA COAL SWAP CONTINUES ITS FALL
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week over week and day on day.
The Q1 swap has lost US$ 1.7 ...
Monday, 15 December 14
WILL TANKERS BENEFIT FROM REEMERGENCE OF FLOATING STORAGE PLAYS? - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The tanker market has been seeing high freight rates for some time now, riding on the back of low oil prices, which are boosting demand from develo ...
Monday, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
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- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Siam City Cement - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Tamil Nadu electricity Board
- Australian Coal Association
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Sojitz Corporation - Japan
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- ASAPP Information Group - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Economic Council, Georgia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Wood Mackenzie - Singapore
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- The University of Queensland
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
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