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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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Saturday, 26 June 21
KOSPO INVITED BIDS FOR 480,000 MT OF COAL PER ANNUM
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 480,000 MT of NCV 1 Min. 5,600 (Spec 1) /Min. 5,0 ...
Thursday, 24 June 21
FEBRUARY'S INCREASE IN COAL-FIRED ELECTRIC GENERATION REDUCED U.S. COAL STOCKPILES - EIA
Coal stockpiles at U.S. power plants decreased significantly from December 2020 to February 2021, including a draw of nearly 16 million tons in Feb ...
Wednesday, 23 June 21
MARKET INSIGHT - INTERMODAL
The first half of 2021 has brought a very sharp and continued recovery in the dry bulk market and while many where expecting a relatively strong ma ...
Thursday, 17 June 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR GLOBAL SEABORNE COAL TRADE; CHINA'S COAL IMPORTS - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade.
Total global loadings in the 12 months of 2020 were down -12 ...
Thursday, 17 June 21
FITCH RATINGS RAISES SHORT-TERM OIL AND GAS PRICE ASSUMPTIONS
Fitch Ratings has increased its 2021 and 2022 oil price assumptions for the Brent and West Texas Intermediate (WTI) benchmarks due to stronger year ...
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- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Planning Commission, India
- TNB Fuel Sdn Bhd - Malaysia
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
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