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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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Thursday, 20 November 14
HANDY: INDO ROUNDS ARE BEING FIXED IN REGION OF US$ 10K - FEARNLEYS
Handy
In the Atlantic we have experienced firmer rates this week much lead by the grain activity out of USG. Vsls open in the USG can achieve in ...
Thursday, 20 November 14
DEMAND FOR DRY BULK CARRIERS INCREASES ON THE BACK OF HEIGHTENED FREIGHT RATE MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners are looking to take advantage of favorable market conditions through the acquisition of more dry bulk carriers. According to shipbroker ...
Wednesday, 19 November 14
INDONESIA FUEL-PRICE RISE A CLEAR, POSITIVE REFORM SIGNAL - FITCH
COALspot.com: Indonesia's hike of more than 30% in administered fuel prices, announced on 17 November, provides a clear, positive signal of the ...
Wednesday, 19 November 14
CAPES WERE UNDER PRESSURE; LOST 20% WITHIN A WEEK
COALspot.com: " The negative environment in which the week prior ended, marked this past week as well, which closed off on Friday noting the f ...
Wednesday, 19 November 14
SHIPPING MARKET INSIGHT - BY KATERINA RESTIS
The current Ebola outbreak in West Africa has been declared as a worldwide health emergency by the World Health Organization and has had a great im ...
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- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- The University of Queensland
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Heidelberg Cement - Germany
- Economic Council, Georgia
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
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