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