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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, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
Friday, 12 December 14
U.S WEEKLY COAL PRODUCTION UP 3.4% W/E DECEMBER 6
COALspot.com – United States the world's one of the largest coal producers, produced approximately 19.6 million short tons (mmst) of coal ...
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- Tamil Nadu electricity Board
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Sakthi Sugars Limited - India
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
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