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