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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, 09 July 21
CAN WE EXPECT AFFORDABLE POWER SUPPLY BY REPLACING COAL BASED POWER WITH LNG? - FINANCIAL EXPRESS
Bangladesh government’s recent decision to cancel the contracts for 10 coal fired power plants in late June 2021 has invited interest in the ...
Thursday, 08 July 21
STRONGEST HALF YEAR FOR SHIPPING MARKETS SINCE 2008 - CLARKSONS
A year on from peak trade disruption, we update our half year report for the shipping industry profiling a strong recovery and some exceptional ind ...
Tuesday, 06 July 21
INDONESIA COAL PRICE REFERENCE RISES TO 112 MONTHS HIGH IN JULY 2021; 121.15% HIGHER COMPARED TO THAT IN JULY 2020 PRICE
COALspot.com: The Indonesia coal price reference for July 2021 fixed at US$ 115.35 per ton FOB vessel.
The Indonesia coal price referenc ...
Tuesday, 06 July 21
INDONESIAN COAL EXPORTS FELL BY 37% YOY IN 1Q21 DUE TO ADVERSE WEATHER CONDITIONS - FITCH RATINGS
Chinese coal imports declined by 25% yoy in 5M21as a result of both restrictions on Australian coal and the high base in 2020. Import volume in Jan ...
Tuesday, 06 July 21
INDONESIAN 4,200 INDEX HAS ALSO INCREASED TO OVER USD50 PER TONNE SINCE MAY THIS YEAR REFLECTING STRONG CHINESE IMPORT DEMAND - FITCH RATINGS
Price Surge Since March
APAC thermal coal has resumed its price surge since March this year. The benchmark Newcastle 6,000kcal/kg grade c ...
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- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Baramulti Group, Indonesia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- OPG Power Generation Pvt Ltd - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- Kartika Selabumi Mining - Indonesia
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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