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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, 27 May 21
KOMIPO INVITED BIDS FOR 1.56 MILLION TONS OF BITUMINOUS COAL
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 ...
Thursday, 27 May 21
CHINA POWER DEMAND EXCEEDS PRE-COVID-19 LEVELS; THERMAL OUTPUT STRONG - FITCH RATINGS
Rising Consumption: Total power consumption rose by 21.2% yoy to 1,921.9GWh in 1Q21 due to the fast recovery of China’s economy, after a drop ...
Thursday, 27 May 21
CHINA'S POWER DEMAND EXCEEDS PRE-PANDEMIC LEVELS; RENEWABLES TO DRIVE DEVELOPMENT - FITCH RATINGS
China's power consumption exceeded the pre-Covid-19 levels in 1Q21 due to the country's fast economic recovery, with strong output from the ...
Wednesday, 26 May 21
THE INDONESIA COAL PRICE REFERENCE FOR MAY 2021 SETTLES AT US$ 89.74 PER TON
COALspot.com: The Indonesia coal price reference for May 2021 settles at US$ 89.74 per ton FOB vessel.
The Indonesia coal pric ...
Wednesday, 26 May 21
MARKET INSIGHT - INTERMODAL
Last year crude tankers’ newbuilding contracting activity was devastated by the economic effects of the Covid-19 pandemic and the cloud of un ...
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- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Oldendorff Carriers - Singapore
- The University of Queensland
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Independent Power Producers Association of India
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- White Energy Company Limited
- MS Steel International - UAE
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
- South Luzon Thermal Energy Corporation
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Vizag Seaport Private Limited - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
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