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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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Tuesday, 01 June 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.02 PCT - XINHUA
China Taiyuan coal transaction price index stood at 160.06 points Monday, down 0.02 percent week on week.
The index, released by Chi ...
Tuesday, 01 June 21
BUMA PRODUCED 11.4 MILLION TONNES OF COAL IN 4Q 2020, 5% LOWER COMPARED TO 12.2 MILLION TONNES IN 4Q 2019
PT Delta Dunia Makmur Tbk. presents its newsletter with consolidated financial and operating results that include its primary and wholly-owne ...
Sunday, 30 May 21
PAKISTAN IS PLANNING TO END COAL IMPORTS, WORSENING OUTLOOK FOR SOUTH AFRICAN COAL - IEEFA
The growing and irreversible risks being faced by South African coal exporters
As Thungela Resources’ CEO attempts to talk up ...
Sunday, 30 May 21
G7 COAL FINANCE EXIT AND WHY IT MATTERS FOR INDIA - IEEFA
While India doesn’t rely on export credit finance to fund new coal plants, there are material implications
The commitment by the Group o ...
Saturday, 29 May 21
SKULD’S IMO 2020 SULPHUR CAP EXPERIENCE
More than a year has passed since the International Maritime Organization (IMO) mandate for the 0.50% sulphur cap for marine fuel (MARPOL Annex VI) ...
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- Latin American Coal - Colombia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- The University of Queensland
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
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