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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, 10 June 21
INDONESIA COAL EARNINGS RECOVERY TO SLOW AFTER STRONG 1Q - FITCH RATINGS
Fitch Ratings expects the recovery in operating and financial performance of Indonesian coal miners and coal contractors to slow during rest of 202 ...
Thursday, 10 June 21
U.S. COAL PRODUCTION TO TOTAL 600 MMST IN 2021, 11% MORE THAN IN 2020 - EIA
EIA expects U.S. coal production to total 600 million short tons (MMst) in 2021, which is 61 MMst (11%) more than in 2020.
The increase is dri ...
Wednesday, 09 June 21
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
The In-Person Maritime Event
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
culminates successfully in Dubai
Press Release: ...
Wednesday, 09 June 21
MARKET INSIGHT - INTERMODAL
“Counter cyclical investments.” usually take place by investing in a “bad” market at the point that ensures that the acquir ...
Saturday, 05 June 21
KOMIPO INVITED 5600 NAR COAL OFFERS FOR THREE YEARS SUPPLY; 520,000 MT PER YEAR
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
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- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Minerals Council of Australia
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Parliament of New Zealand
- Xindia Steels Limited - India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
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