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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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Wednesday, 26 May 21
NEW POWER AND ENERGY MASTER PLAN MUST BE DESIGNED IN BANGLADESH'S BEST INTERESTS, NOT JAPAN'S - IEEFA
JICA must deliver a low or zero emissions plan as promised, not fund Matarbari 2 coal plant
Clear understandings from the Bangladesh ...
Tuesday, 25 May 21
KOREA SOUTHERN POWER INVITED BIDS FOR 870,000 MT OF MIN 5300 NCV COAL FOR 2021 TO 2023.
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 870,000 MT of Min 5,300 kcal/kg NCV coal for Augu ...
Tuesday, 25 May 21
CHINA’S COAL OUTPUT RISES IN FIRST FOUR MONTHS - XINHUA
China’s raw coal output rose 11.1 percent year on year to 1.29 billion tonnes in the first four months of 2021, official data showed.
&nb ...
Tuesday, 25 May 21
MARINE SHIPPERS BULK UP: ANOTHER GAME OF CHICKEN IN THE WORKS? - THE KOREA TIMES
Global shipping companies have been placing orders for large ships, with many anticipating further increased competition within the next three year ...
Wednesday, 12 May 21
U.S. COAL PRODUCTION TO INCREASE BY 43 MMST IN 2021 TOTAL 582 MILLION SHORT TONS - EIA
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...
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- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- VISA Power Limited - India
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Economic Council, Georgia
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Parliament of New Zealand
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Deloitte Consulting - India
- Marubeni Corporation - India
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Independent Power Producers Association of India
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Australian Coal Association
- Indogreen Group - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
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