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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, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
Wednesday, 24 February 21
MARKET INSIGHT - INTERMODAL
With yields of up to 563%, the shares of Greek shipping companies listed on Wall Street are recorded. The Coronavirus pandemic has not significantl ...
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- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Wood Mackenzie - Singapore
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Economic Council, Georgia
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
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