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