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