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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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Sunday, 11 July 21
COAL SHOWS ITS STAYING POWER AS ECONOMIES BOUNCE BACK - THE WALL STREET JOURNAL
Coal use is surging in some of the world’s largest economies as electricity demand rebounds from the pandemic, illustrating the challenges to ...
Sunday, 11 July 21
ROBUST CHINA COAL DEMAND AMID AUSTRALIA IMPORT BAN FUELS PRICE RALLY - REUTERS
Seaborne coal has become a quiet winner among energy commodities, lacking the attention of higher-profile crude oil and liquefied natural gas (LNG) ...
Saturday, 10 July 21
OVERESTIMATED LCOES OF COAL-FIRED POWER PLANTS CREATE A FINANCIAL BUBBLE - IEEFA
Massive stranded asset risk detrimentally affects the financial and power distribution
India’s future coal-fired power project pipeline ...
Friday, 09 July 21
EIA FORECASTS COAL’S GENERATION SHARE IN U.S TO RISE FROM 20% IN 2020 TO 24% THIS YEAR BUT TO FALL TO 22% NEXT YEAR
The July Short-Term Energy Outlook (STEO) of EIA remains subject to heightened levels of uncertainty related to the ongoing economic recovery from ...
Friday, 09 July 21
KOREA SOUTH-EAST POWER CO., LTD. INVITES BIDS FOR 1.86 MILLION TONS OF COAL OF 5600 & 4000 NCV COAL FOR THREE YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 280,000 – 300,000 MT of Min. ...
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- The Treasury - Australian Government
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Planning Commission, India
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Thai Mozambique Logistica
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Minerals Council of Australia
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Australian Coal Association
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
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