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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, 13 August 21
INDONESIA’S COAL EXPORTS TO JAPAN DECLINED BY -26.3% YOY TO 11.9 MLN TONNES IN THE FIRST 7 MONTHS OF 2021; STILL THE SECOND LARGEST SOURCE FOR JAPAN’S COAL IMPORTS IS INDONESIA - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade. Total global loadings in the 12 months of 2020 were down -12.7% year-on-yea ...
Thursday, 12 August 21
ONLY 3 VLCCS SOLD FOR DEMOLITION IN 2021 AS SECONDHAND PRICES TEMPT - BIMCO
During the first seven months of 2021, only three actively trading Very Large Crude Carriers (VLCCs) have been sold for demolition. The current mar ...
Wednesday, 11 August 21
U.S: EIA EXPECTS COAL EXPORTS TO TOTAL 90 MMST IN 2021, 30% INCREASE FROM 2020
Coal production in EIA's forecast totals 607 million short tons (MMst) in 2021, an increase of 13% over 2020.
EIA is also ...
Wednesday, 11 August 21
MARKET INSIGHT - INTERMODAL
Energy is at the core of the global climate dialogue as the climate challenge is essentially an energy challenge. Policy experts around the world a ...
Tuesday, 10 August 21
34 INDONESIAN COAL COMPANIES TEMPORARILY BANNED FOR COAL EXPORTS
The Ministry of Energy and Mineral Resources (ESDM) has imposed sanctions in the form of a coal export ban for 34 coal companies as reported by CNB ...
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- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- European Bulk Services B.V. - Netherlands
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Minerals Council of Australia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- White Energy Company Limited
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
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