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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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Saturday, 06 March 21
AUSTRALIAN COAL: SOME WEAKNESS COULD MATERIALIZE AFTER THE WINTER - ING
Newcastle coal prices remain well supported for now, however as we move out of the winter months we would expect prices to come under pressure. Mea ...
Saturday, 06 March 21
ASIA SEABORNE COAL PRICES START TO RETREAT, CHINA-AUSTRALIA DISPUTE LINGERS - REUTERS
There are signs that the price and demand surge for coal during the recent colder-than-expected winter across North Asia is starting to ease, even ...
Thursday, 04 March 21
HEAD OF JBIC SAYS THE JAPANESE BANK WILL NOT FUND NEW COAL PLANT DEVELOPMENT - NHK NEWS
The governor of the Japan Bank for International Cooperation has said that the government-owned financial institution will stop funding new coal-fi ...
Wednesday, 03 March 21
MARKET INSIGHT - INTERMODAL
Following the recent rally to multi year highs of metal-based commodities, amid an unprecedented global economic stimulus, discussions of an emergi ...
Saturday, 27 February 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES DOWN - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
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- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Thai Mozambique Logistica
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Australian Coal Association
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Bhushan Steel Limited - India
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
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