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