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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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Wednesday, 10 February 21
MARKET INSIGHT - INTERMODAL
We have just entered February, Chinese New Year holidays are about to start and the SnP market for bulkers is so hot as every seller would dream of ...
Tuesday, 09 February 21
SWITCHING COAL PLANTS TO PLN'S BIOMASS COFIRING PLAN IS NO MAGIC BULLET - IEEFA
Implementation risks for Indonesia PLN's switch from coal to biomass cofiring
PLN’s biomass cofiring plan will require not ...
Friday, 05 February 21
THE INDONESIA COAL PRICE REFERENCE FOR FEBRUARY 2021 SETTLES AT US$ 87.79 PER TON FOB VESSEL
COALspot.com: The Indonesia coal price reference for February 2021 settles at US$ 87.79 per ton FOB vessel. The February reference price is the hig ...
Thursday, 04 February 21
WHY BANGLADESH SHOULDN’T COUNT ON A FOSSIL FUEL FUTURE - IEEFA
Around US$50 billion of LNG projects in Asia at risk of cancellation
Two astonishing figures have circulated in the Asian energy sector in the ...
Wednesday, 03 February 21
INDONESIA TO EXPORT 395 MILLION TONS OF COAL IN 2021 - ESDM
Data from the Ministry of Energy and Mineral Resources shows that, Indonesia is planning to produce 550 million Ton of coal in 2021 and as of t ...
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- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Straits Asia Resources Limited - Singapore
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Minerals Council of Australia
- Trasteel International SA, Italy
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Parliament of New Zealand
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- MS Steel International - UAE
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Binh Thuan Hamico - Vietnam
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
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