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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, 12 May 21
MARKET INSIGHT - INTERMODAL
Tanker S&P is finally back!
For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sect ...
Monday, 10 May 21
PAKISTAN: COAL GASIFICATION AND LIQUEFACTION HARMFUL TO ECONOMY - IEEFA
There is no second life for coal
Pakistan’s intention to use coal for power production through gasification and liquefaction technologie ...
Sunday, 09 May 21
HERE'S WHY INVESTORS ARE POURING MONEY INTO COAL, DESPITE ITS BLEAK FUTURE - FORBES
Coal stocks have surged this year – along with the wider energy sector – but experts warn these are likely short-term gains for an indu ...
Sunday, 09 May 21
MAYBANK TO STOP COAL FINANCING - BERNAMA
Malayan Banking Bhd (Maybank) will stop financing new coal activities as part of its sustainable agenda.
Currently, coal financing m ...
Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
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- Electricity Authority, New Zealand
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Jindal Steel & Power Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Madhucon Powers Ltd - India
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Coalindo Energy - Indonesia
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