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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, 08 December 14
GOVERMENT TO WITHDRAW CNC STATUS OVER SUSPECTED FLAWS - THE JAKARTA POST
The Energy and Mineral Resources Ministry’s directorate general for mineral and coal plans to review the clean and clear (CnC) status held by ...
Monday, 08 December 14
FOB NEWCASTLE COAL SWAPS SLIP W-O-W AND M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery closed at US$ 52.10 on 5 December after losing US$ 0.55 (-1.04%) month over ...
Sunday, 07 December 14
SUPRAMAX S8 ROUTE SLIGHTLY INCREASED WEEK ON WEEK
COALspot.com: The BDI continued its fall as cape index fell heavily week on week.
The BDI lost around14.83 pct within last five working day an ...
Saturday, 06 December 14
TANKER FLOATING STORAGE PLAYS COULD COME INTO PLAY IF VLCC RATES STAY AT CURRENT LEVEL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Contango: A phenomenon in commodities futures price curves where the delivery price of a futures contract is greater than the current price. With t ...
Saturday, 06 December 14
MUNDRA PORT MAKES HISTORY BY HANDLING THE LARGEST BULK CARRIER TO CALL ON WEST COAST OF INDIA
COALspot.com: Adani Ports & SEZ Ltd, India’s largest port developer and part of Adani Group, yesterday said its Mundra Port successf ...
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- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
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