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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, 28 April 21
MARKET INSIGHT - INTERMODAL
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...
Monday, 26 April 21
CHINA TO FURTHER CUT COAL USE IN 2021 - XINHUA
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...
Wednesday, 21 April 21
COAL FINANCING COSTS HAVE SURGED IN PAST 10 YEARS - UNIVERSITY OF OXFORD - THE GUARDIAN
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...
Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
Sunday, 18 April 21
INDONESIA LIKELY TO WITNESS 119 OIL AND GAS PROJECTS STARTS ACROSS VALUE CHAIN BY 2025, SAYS GLOBALDATA
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...
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- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Planning Commission, India
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- MS Steel International - UAE
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
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