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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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Wednesday, 28 July 21
IN THE PHILIPPINES, COAL’S DEMISE MAKES WAY FOR A RENEWABLE ENERGY BOOM - IEEFA
Imported gas lock-in could undermine the economic benefits of a clean energy transition
The Philippines’ energy sector is on t ...
Wednesday, 28 July 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during this first half of the year, we continue to come across surprises and new restrictions which are trembling ...
Saturday, 24 July 21
UNDERSTANDING INDIA'S LATEST PEAK POWER DEMAND RECORD - IEEFA
Ramping up solar will be crucial as peak power demand hits during the day
At around noon on 7 July 2021, India’s instantaneous ...
Wednesday, 21 July 21
MARKET INSIGHT - INTERMODAL
Dry Buk Sales and Purchase activity has heated up during 2021, reaching record high levels during the first half of the year. The increased interes ...
Monday, 19 July 21
CHINA'S COAL OUTPUT UP 6.4 PCT IN H1 - XINHUA
China’s raw coal output climbed 6.4 percent year on year to 1.95 billion tonnes in the first six months of the year, official data showed.
...
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- The University of Queensland
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Minerals Council of Australia
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
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