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Friday, 21 May 21
MARKET INSIGHT - INTERMODAL
 The dry bulk market’s counter seasonal surge so far into the first half of the year -in a sort of 2010 manner - and Capesize’s recent retreat from almost 11-year highs is raising the question whether a counter seasonal market drop is in the cards during the 2H of the year in the context of a broader market upcycle.
While the market is multi-factorial with fundamentals, sentiment and inter-freight correlation amongst sizes feeding one another, the current Cape market correction was exacerbated after Chinese authorities intervened to curb iron ore price speculation. A subsequent sharp reversal of iron ore and steel prices from record highs and FFAs selling off contributed to pulling the Cape market lower, while the smaller segments were unaffected. It is well known that Capesize is characterized by the highest freight volatility and even though that we expect volatility to keep up, we are not convinced that this is the turning point for a prolonged market correction. Fundamentals are likely to outlast volatility and we cannot exclude that the next leg higher will find a much higher peak over the next two quarters with cargo export seasonality emerging stronger across all commodities and particularly iron ore.
Iron Ore exports to accelerate in 2H2021; the urge for higher quality iron ore is likely to intensify: China’s iron ore inventories have been destocked by more than 8.0 million tons over the past month amid elevated demand and major iron ore miners running behind their export guidance, likely to trigger a new restocking wave. Forward iron ore prices on the curve, even if spot iron ore prices softened from here, incentivize iron ore miners to accelerate exports during the 2H2021.
So far, China’s emissions regulations on steel production were unsuccessful in containing it. Record high steel mills margins incentivized higher steel production ex. strictly regulated Tangshan with YTD Jan-Apr crude steel production up +15.6% y-o-y. If steel production controls intensify during the second half, this will further increase demand for high quality iron ore, in order to optimize the steel process. In addition, the scrap scramble from steel mills outside China could put a lid on China’s increasing scrap usage in the steel mix in the short term.
Macro indicators continue to be bullish for dry bulk demand in the next quarters: China’s Property new starts - a leading indicator of steel demand – have increased +19.0% YTD in 2021, while April’s y-o-y growth slowed down at +9.3% y-o-y. Any slow down in the growth of new floor space under construction will not immediately translate into lower steel and iron ore demand; developers are likely to accelerate property completions from now on continuing to drive demand.
Other than China, global steel production and demand conditions are robust, reflected by record high steel prices both in the US and Europe. Spot and forward steel prices have surged, giving steel mills the opportunity to hedge at profitable levels, therefore global steel production will continue to expand.
Global manufacturing PMIs are at 10 year cycle highs, despite having softened during April and lead demand for commodities. Oil prices have been lagging the rise in other commodities and are projected to increase significantly over the next two quarters, which could provide further support to the dry bulk market via - and not limited to - the bunker-$ per ton freight- speed relation. Fundamentals of other dry bulk commodities are also robust, with electricity generation set to accelerate over the summer in addition to increased industrial production, while China’s domestic coal production is underperforming amid mine safety checks.
Early signs of credit tightening: Following a record high stimulus over the previous year, latest credit growth figures in China indicate a slow-down in credit supply during April, however as long as inflation at the producers level accelerates the tightening impact is muted in our view. China’s potential deleveraging from here should not be expected to have a negative effect on dry bulk commodities demand, until credit tightening starts to interfere with producers’ profit margins.
Last but not least, China’s political tension with Australia is more likely to translate into higher ton-miles in the medium term, with Atlantic production of high-quality iron ore and coal substituting for any potential loss of Australia’s market share. In the longer term, China’s 14th year plan that calls for an increase of electric arc furnaces (scrap) in steel production to 15-20% by 2025 and self sufficiency share of iron ore above 45% will certainly have an impact in the way iron ore is procured with China having higher control over both supply and iron ore prices.
by Tamara Apostolou,
Research Analyst
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
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 reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Friday, 27 August 21
THE ECONOMICS OF INDONESIA’S DIESEL POWER PLANT TO GAS CONVERSION PLAN ARE PROBLEMATIC - IEEFA
Deploying new small-scale LNG is an uphill battle for PGN
Indonesian gas is currently in a precarious position, where the government needs to ...
Thursday, 26 August 21
INDIA IMPORTED 17.06 MLN TONNES OF LPG IN 2020; UP 11.5% Y-O-Y
Global LPG trade remained fairly positive in 2020, despite the global economic impact from COVID-19, and surged strongly in the first half of 2021. ...
Thursday, 26 August 21
MARKET INSIGHT - INTERMODAL
24th of August 2021, the Baltic Dry Index reached 4,201, a YTD high and the highest since May 2010.
Cape 5TC daily average @ 51,472
...
Tuesday, 24 August 21
COAL PRICE RALLY TO PRESSURE CHINESE POWER GENCOS’ MARGINS FITCH RATINGS
Fitch Ratings expects the pressure on Chinese power generation companies’ (gencos) profit from the recent coal price surge to weaken their cr ...
Tuesday, 24 August 21
TIGHT POWER SUPPLY IN CHINA AMID STRONG DEMAND, HIGH COAL PRICES - FITCH RATINGS
China experienced tight power supply in 1H21 on stronger than expected power demand as economic activity continued to recover, Fitch Ratings says i ...
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- Directorate General of MIneral and Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- The University of Queensland
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Marubeni Corporation - India
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Barasentosa Lestari - Indonesia
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
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