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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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Friday, 12 March 21
BATTERIES ARE REPLACING COAL NOT GAS - IEEFA
No amount of government subsidies can halt gas’s decline
Batteries are replacing coal not gas.
Today the early ...
Friday, 12 March 21
RENEWABLES SHOULD BE FOCUS OF VIETNAM’S DRAFT PDP8, NOT COAL AND GAS - IEEFA
Evidence was clear to inform the next stage of Vietnam’s power development
Vietnam’s recently published draft power deve ...
Thursday, 11 March 21
U.S. TO PRODUCE 581 MMST IN 2021, UP 8% FROM 2020 - EIA
EIA expects U.S. coal production to total 581 MMst in 2021, 42 MMst (8%) more than in 2020. In 2022, EIA expects coal production to rise by a furth ...
Thursday, 11 March 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during the first months of 2021, we have come across a new era in which Owners chose the shipyards to repair their ...
Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
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- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Minerals Council of Australia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Mercator Lines Limited - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Indian Energy Exchange, India
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Makarim & Taira - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Australian Coal Association
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Kartika Selabumi Mining - Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
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