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