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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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- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Petron Corporation, Philippines
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Planning Commission, India
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Posco Energy - South Korea
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