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