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