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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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Sunday, 21 February 21
ANZ DIVESTING FROM THE WORLD’S LARGEST COAL EXPORT PORT IS 'PRAGMATISM' - IEEFA
The biggest buyers of Australian thermal coal have committed to net-zero emissions
ANZ, Australia’s third largest bank, has decided to s ...
Sunday, 21 February 21
EDITORIAL: TIME FOR BANGLADESH TO FOCUS ON RENEWABLE ENERGY, NOT COAL - DHAKA TRIBUNE
Shifting away from coal is not only desirable, but absolutely necessary in these times.
In spite of being detrimental to environment ...
Wednesday, 17 February 21
STRANDED ASSETS A LONG-TERM RISK FOR MAJOR FOSSIL FUEL EXPORTERS - FITCH RATINGS
Fossil exporters face a loss of GDP, government revenue and export receipts from the transition to a lower-carbon economy over the coming decades. ...
Friday, 12 February 21
U.S: WIND SURPASSED COAL AS NO. 1 FUEL SOURCE IN 2020 FOR SOUTHWEST POWER POOL - IEEFA
Wind energy growth due to geography, design factors, and new installations
Wind surpassed coal as the primary power generation sourc ...
Wednesday, 10 February 21
FY21 COAL DEMAND MAY BE LOWER THAN PREVIOUSLY ESTIMATED DUE TO COVID-19: PRALHAD JOSHI - PTI
Coal demand in the current fiscal may be lower than the initial estimate of 1,085 million tonnes (MT) due to the impact of COVID-19, Parliament was ...
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- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- The University of Queensland
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Planning Commission, India
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Australian Coal Association
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
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