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