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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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Friday, 28 November 14
NEW BIMCO CLAUSE AIMS TO REDUCE SUPPLIERS' RELIANCE ON SHIP ARREST FOR CHARTERERS' UNPAID BUNKERS
KNOWLEDGE TO ELEVATE
Ship owners can, on occasion, find themselves in the invidious position of suffering unexpected loss of hire due to a tim ...
Friday, 28 November 14
JSW ENERGY AND GRM RESOURCES JOIN GLOBALCOAL
COALspot.com: globalCOAL® announced yesterday that two new Market Members have joined its online coal trading platform. According globaCOAL&rsq ...
Thursday, 27 November 14
MINING SERVICES TAX SPIKED BY 233% - BISNIS INDONESIA
COALspot.com: The Energy and Mineral Resources Department of Indonesia said the tax contribution from mining services sector in the 3rd Q 2014 ...
Thursday, 27 November 14
PANAMAX : EXPECTATION'S FOR A STRONG END OF YEAR RUSH, DISAPPEAR DAY BY DAY - FEARNLEYS
Handy
“We have experienced a firming market the last couple of weeks. More activity from cargo owners in the Atlantic and less available to ...
Wednesday, 26 November 14
OVERSUPPLY OF TONNAGE PUSHED PANAMAX SEGMENT DOWN FOR ANOTHER WEEK
COALspot.com: The Dry Bulk market managed to reverse its course from the week prior and with the sole exception of the Panamax segment, we witnesse ...
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- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- VISA Power Limited - India
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Parliament of New Zealand
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Marubeni Corporation - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
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