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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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Monday, 09 August 21
AIIB MAY OFFICIALLY END COAL FINANCING IN 2022 - CHINA DAILY
The Asian Infrastructure Investment Bank may officially rule out coal projects if it updates its energy strategy next year, after shunning funding ...
Monday, 09 August 21
CHINA COAL INVENTORY THINS AMID PEAK POWER DEMAND- STATE MEDIA : REUTERS
China’s coal inventories have dropped to near historic lows since August due to peak summer electricity demand and transportation bottlenecks ...
Wednesday, 04 August 21
THE INDONESIAN COAL PRICE REFERENCE SURGED TO A FRESH RECORD HIGH OF USD 130.99 A TON IN AUGUST 2021
COALspot.com: The Indonesian Coal Price Reference ( HBA) surged to a fresh record high of USD 130.99 a ton in August 2021.
The ...
Wednesday, 04 August 21
MARKET INSIGHT - INTERMODAL
Unlike the Dry Bulk and Container sectors where freight rates have surged into 2021, the tankers market continues to experience lackluster earnings ...
Sunday, 01 August 21
SEABORNE HARD COAL TRADE IN 2020 DECREASED BY 149 MILLION MT, OR 12.1%, TO 1,083 MILLION MT - GERMAN COAL IMPORTERS ASSOCIATION
- Reduced coal-fired power plant fleet secures Germany’s power supply in severe winter of 2020/2021; little wind availability and hence stron ...
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- TeaM Sual Corporation - Philippines
- The University of Queensland
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- VISA Power Limited - India
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Indogreen Group - Indonesia
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
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