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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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Sunday, 18 April 21
WORLDSTEEL RAISES 2021 STEEL DEMAND GROWTH FORECAST TO 5.8% - WORLDSTEEL
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...
Sunday, 18 April 21
CHINA'S Q1 COAL OUTPUT RISES 16% ON STRONG DEMAND FOR WINTER HEATING - REUTERS
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...
Wednesday, 14 April 21
INDIA HAS A RECORD LEVEL OF STOCKPILED COAL DAMPENING NEED FOR NEW DOMESTIC MINES - IEEFA
Proposed coal mining expansions at odds with excess supply
India has stockpiled a record 132 million tonnes of coal – enough t ...
Wednesday, 14 April 21
BANGLADESH NEEDS A RENEWABLES FOCUS, NOT A SWITCH FROM 'COAL TO GAS' - IEEFA
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations
The emerg ...
Wednesday, 14 April 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 1.10 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.05 points Monday, down 1.10 percent week on week.
The index, released by Chi ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Bhatia International Limited - India
- Vedanta Resources Plc - India
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Samtan Co., Ltd - South Korea
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Planning Commission, India
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Minerals Council of Australia
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Simpson Spence & Young - Indonesia
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