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