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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, 07 April 21
MARKET INSIGHT - INTERMODAL
Following the end of the catholic easter, during which the majority of shipping market participants were on holidays, it is interesting to note a f ...
Wednesday, 07 April 21
COAL USED TO GENERATE ELECTRIC POWER IN U.S. WILL INCREASE BY 13 PERCENT TO 495 MMST IN 2021 - EIA
EIA expects U.S. coal production to total 585 MMst in 2021, 46 MMst (9%) more than in 2020. In 2022, EIA expects coal production to grow by an addi ...
Wednesday, 31 March 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.12 PCT - XINHUA
China Taiyuan coal transaction price index stood at 139.03 points Monday, up 0.12 percent week on week.
The index, released by China ...
Wednesday, 31 March 21
MARKET INSIGHT - INTERMODAL
Over the past week, the biggest story has been the blockage of the Suez Canal, as a result of the grounding of the container ship Ever Given. At th ...
Monday, 29 March 21
MOODY'S: OUTLOOK FOR GLOBAL METALS AND MINING INDUSTRY TURNS POSITIVE ON HIGHER EBITDA IN PANDEMIC'S WAKE
- Demand for steel, iron ore and copper will rise, while aluminum, nickel and zinc will remain in surplus
- EBITDA is expected to ...
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- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- The Treasury - Australian Government
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Xindia Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- PTC India Limited - India
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
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