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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, 14 November 14
MORE NATURAL GAS FROM RUSSIA TO HELP STABILISE CHINA PRICES - FITCH RATINGS
COALspot.com: Fitch Ratings has said possible additional natural gas supplies from Russia's OAO Gazprom to China via the Altai pipeline would h ...
Thursday, 13 November 14
SLOWER AND LOWER HAS BEEN THE TREND OF THE PANAMAX IN BOTH HEMISPHERES - FEARNLEYS
Handy
We are experiencing an oversupply of tonnage in the Atlantic which is out numbering the amount of cargoes, Fearnleys broker says in its lat ...
Thursday, 13 November 14
DRY BULK MARKET'S REBOUND HINGES ON IRON ORE OVERSUPPLY ISSUES MOVING FORWARD - HELLENIC SHIPPING NEWS
“One man’s benefit, is another man’s demise” is a phrase which can be used to describe today’s situation in the dry b ...
Thursday, 13 November 14
COAL MINISTER WANTS INDIA TO STOP COAL IMPORTS IN TWO OR THREE YEARS
COALspot.com: India to ramp up coal production to a billion tonnes by 2019 from its current level of 490 million tones. According to Power and Coal ...
Thursday, 13 November 14
MODERN DRY BULK SHIPS' PRICES START FIRMING UP - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While the main story of the past few weeks has been the rebound of the dry bulk market, which has been a result of increased Chinese iron ore impor ...
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- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- VISA Power Limited - India
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- White Energy Company Limited
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Australian Coal Association
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Heidelberg Cement - Germany
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Global Business Power Corporation, Philippines
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Singapore Mercantile Exchange
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
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