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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, 05 June 21
IT'S TIME FOR THE BIDEN ADMINISTRATION TO CHAMPION RENEWABLE ENERGY IN THE PHILIPPINES, NOT NUCLEAR OR FOSSIL GAS - IEEFA
Fossil gas and nuclear investments risk locking in costly, outdated infrastructure for the long-term
The United States has spent the ...
Friday, 04 June 21
NEW COAL-FIRED POWER PLANTS IN INDIA WILL BE ECONOMICALLY UNVIABLE - IEEFA
Coal capacity additions face major stranded asset risk
Much of India’s 33 gigawatts (GW) of coal-fired power capacity currently under co ...
Thursday, 03 June 21
JUNE HBA IS HITTING ABOVE $100 AND SETTLED AT ITS HIGHEST SINCE OCTOBER 2020
COALspot.com: The Indonesia coal price reference for June 2021 settles at US$ 100.33 per ton FOB vessel.
The Indonesia coal pr ...
Wednesday, 02 June 21
INDONESIA RV WAS DOWN TO LOW/MID $20,000S DAY FOR PANAMAX/KAMSARMAX WITH DELIVERY S CHINA - BANCHERO COSTA
Panamax
A softening week in the Pacific basin with rates under a downward pressure mainly caused by the oversupply of tonnage in the area, said ...
Wednesday, 02 June 21
EUROPEAN UNION'S IRON ORE IMPORTS - BANCHERO COSTA
The European Union (27) is currently the fourth largest importer of iron ore in the world, after China, Japan, and South Korea.
Euro ...
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- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Kepco SPC Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Altura Mining Limited, Indonesia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Economic Council, Georgia
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Australian Coal Association
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- PTC India Limited - India
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
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