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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, 10 November 14
Q4' 15 FOB INDONESIA COAL SWAP CLOSED LOWER THAN Q1' 15 CLOSING PRICE OF US$ 49.58 ON LAST FRIDAY
COALspot.com: Indonesian coal swaps for delivery Q1' 2015 lost month on month, week on week and day on day.
The Q1 swap has lost just US$ ...
Monday, 10 November 14
SGX'S API 4 FOB RICHARDS BAY COAL SWAP FOR Q1' 2015 DELIVERY CLOSED AT US$ 65.44 ON 7 NOV, LOST 4.08% M-O-M
COALspot.com: API 4 FOB Richards Bay Coal swap for Q1’ 2015 delivery has decreased US$ 2.78 (-4.08%) month over month and US$ 1.41 (-2.11%) w ...
Monday, 10 November 14
MOZAMBIQUE SIGNED CONTRACT WITH ETA STAR OF UAE FOR OPEN CAST COAL MINE IN TETE - AIM
- ETA Star to build slurry pipeline over the 600 kilometers to Beira in Mozambique to transport coal.
- The viability studies show the presence o ...
Monday, 10 November 14
YEAR 2015 CFR SOUTH CHINA COAL SWAP SHOWS A WEAK TREND THIS PAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased US$ 3.74 (-5.63%) month over month and US$ 2.19 (+3.37%) we ...
Sunday, 09 November 14
CAPE INDEX UP 3.06%; PANAMAX INDEX FELL 4.05%
COALspot.com: The BDI was almost at same levels compared to last week closing or just increased 0.77 pct from last week. The BDI was closed at 1437 ...
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- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- Australian Coal Association
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Parliament of New Zealand
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Simpson Spence & Young - Indonesia
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Commonwealth Bank - Australia
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
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