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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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- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- The University of Queensland
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Australian Coal Association
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Standard Chartered Bank - UAE
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Tata Chemicals Ltd - India
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- Planning Commission, India
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
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