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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, 30 June 21
BUMA SIGNED MINING AGREEMENT WITH ADARO
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into an agreement for the p ...
Wednesday, 30 June 21
MARKET INSIGHT - INTERMODAL
The strong freight performance since the beginning of year has continued for the dry bulk market with earnings being at the highest level in over a ...
Monday, 28 June 21
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA THREATENS TO REVOKE 2,350 MINING BUSINESS PERMITS
The Ministry of Energy and Mineral Resources said that the revocation of mining business permits was in accordance with President Jokowi's inst ...
Sunday, 27 June 21
INDONESIA'S STATE-OWNED UTILITY PLN'S 2060 NET ZERO AMBITION NOT WITHOUT FLAWS AND GAPS - IEEFA
Indonesia on the right emissions reduction pathway but same old coal stories persist
Recent announcements by Indonesia’s state-owned uti ...
Saturday, 26 June 21
COAL PRICES HIT DECADE HIGH DESPITE EFFORTS TO WEAN THE WORLD OFF CARBON - WSJ
Rebounding electricity usage and scanty rainfall in China have added fuel to the rally
Coal prices have climbed to their highest lev ...
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- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Independent Power Producers Association of India
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Australian Coal Association
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Planning Commission, India
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Minerals Council of Australia
- Deloitte Consulting - India
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
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