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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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Thursday, 01 July 21
WHY INDIA’S SOLAR POWER TARIFFS ARE CLIMBING AFTER HITTING RECORD LOWS LAST YEAR - IEEFA
What’s behind the recent increase?
Solar tariffs are deflationary. Prices have fallen by 75% in seven years in India, and in 2 ...
Thursday, 01 July 21
END TO COAL POWER BROUGHT FORWARD TO OCTOBER 2024
Press Release: The deadline to phase out coal from Great Britain's energy system has been brought forward by a whole year, highlighting the UK& ...
Thursday, 01 July 21
WHY BUILD 600 NEW UNPROFITABLE COAL PLANTS? - DEUTSCHE WELLE
Governments in Asia are planning 600 new coal plants that could lose investors $150 billion and derail efforts to limit temperature rise in line wi ...
Thursday, 01 July 21
FIVE ASIAN COUNTRIES ACCOUNT FOR 80% OF NEW COAL POWER INVESTMENT - THE GUARDIAN
Five Asian countries are jeopardising global climate ambitions by investing in 80% of the world’s planned new coal plants, according to a rep ...
Wednesday, 30 June 21
DELTA DUNIA MAKMUR RECORDED AN IMPROVED REVENUE IN Q1 2021; REVENUE INCREASED BY 49% QOQ TO US$160 MILLION ON THE BACK OF COAL PRICE RECOVERY
PT Delta Dunia Makmur Tbk. (“DOID”) released its consolidated financial and operating results that include its primary and wholly-owned ...
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- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- LBH Netherlands Bv - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Central Electricity Authority - India
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Kaltim Prima Coal - Indonesia
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