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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, 12 November 14
PANAMAX: WITNESSED A FAIRLY STABLE MARKET IN THE ATLANTIC
COALspot.com: Despite the fact that the Dry Bulk market noted another weekly increase, clouds of uncertainty returned mid-week onwards, as the mini ...
Wednesday, 12 November 14
SHIPPING MARKET INSIGHT - CHRISTOPHER T. WHITTY
COALspot.com: The fight continues between the low-cost iron ore producers and the big three: Vale, Rio Tinto and BHP Billiton. We are moving into a ...
Tuesday, 11 November 14
FACING CHALLENGES AND MEETING OPPORTUNITIES - INTERNATIONAL EPC CONFERENCE & EXHIBITION
Press Release: SKYCONNECTION and TRANSEVENT, which is fully supported by the Institution of Engineers Indonesia and Ministry of Industry of the Rep ...
Tuesday, 11 November 14
NEWCASTLE COAL SWAP CLOSED AT $ 52.65 FOR Q1' 15 DELIVERY
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery decreased US$ 2.83 (-5.10%) month over month and US$ 1.35 (-2.50%) week ove ...
Tuesday, 11 November 14
PORT OF NEWCASTLE'S OCTOBER COAL SHIPMENTS SLIPPED 7.40% M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1,115.7 mil ...
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- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- VISA Power Limited - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Australian Coal Association
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Mintek Dendrill Indonesia
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Power Finance Corporation Ltd., India
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
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