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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, 10 December 14
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS, INTERMODAL
COALspot.com: As 2014 is coming to an end, we look back to what has happened during the year and notice that SnP activity has been particularly sof ...
Wednesday, 10 December 14
WORLD HARD COAL MARKET 2014: PRODUCTION AND TRADE STAGNATING, IMPORTS TO GERMANY AND EUROPE ON THE DECLINE
Press Release: German Coal Importers Association (VDKi) criticizes regulations ordering reduction of CO2 emissions from coal-fired power plants as ...
Tuesday, 09 December 14
PRESSURE ON CHINA COAL MINERS TO CONTINUE DESPITE GOVERNMENT SUPPORT - FITCH
COALspot.com: Fitch Ratings says that Chinese coal mining companies will continue to be pressured by low prices, which will persist despite recent ...
Tuesday, 09 December 14
Q4' 2015, FOB INDONESIA COAL SWAP CLOSED AT $ 49.02 W/E 5 DEC
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$ 0.2 ...
Tuesday, 09 December 14
API 8 CFR SOUTH CHINA COAL SWAPS FELL 1.8% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 1.84 (-2.91%) month over month and US$ 0.95 (-1.52%) we ...
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- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- ICICI Bank Limited - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Australian Coal Association
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Agrawal Coal Company - India
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Planning Commission, India
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
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