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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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Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
Wednesday, 24 March 21
MARKET INSIGHT - INTERMODAL
Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of s ...
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- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Rio Tinto Coal - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
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