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