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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, 14 April 21
MARKET INSIGHT - INTERMODAL
After a series of months where the dry bulk sector was attracting most of the buying interest, tankers SnP activity spiked in the previous weeks. O ...
Tuesday, 13 April 21
INDONESIAN COAL PRICE REFERENCE IN APRIL UP AGAIN ON FIRM DEMAND
COALspot.com: The Indonesia coal price reference for April 2021 settles at US$ 86.68 per ton FOB vessel.
The Indonesia coal pr ...
Monday, 12 April 21
CHINA'S ECONOMIC RECOVERY PUSHES COAL MINES TO INCREASE YIELD - GLOBAL TIMES
China’s fast economic rebound from coronavirus has driven up electricity demand, leading to higher consumption of coal which is seeing rising ...
Monday, 12 April 21
GLOBAL COAL PRODUCTION EXPECTED TO RISE BY 3.5% IN 2021, SAYS GLOBALDATA
Global coal output is estimated to have declined by 2% in 2020 due to COVID-19-related lockdowns and restrictions, with significant reductions obse ...
Wednesday, 07 April 21
KOMIPO ISSUED A TENDER FOR TOTAL 1,560,000 METRIC TONS OF BITUMINOUS COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a tender for total 1,560,000 Metric Tons of Bituminous coal for i ...
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- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- The University of Queensland
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- GMR Energy Limited - India
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Parliament of New Zealand
- London Commodity Brokers - England
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
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