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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, 03 February 21
MARKET INSIGHT - INTERMODAL
"2020 the year from hell for the entire world, had everything for shipowners. The introduction of the sulphur cap and VLSFO, a Pandemic outbre ...
Tuesday, 02 February 21
WILL THE ELECTRONIC B/L BE FULLY IMPLEMENTED? FIVE POINTS TO CONSIDER - MOL
KNOWLEDGE TO ELEVATE
The trend towards digitization of Bills of Lading (B/L) has begun to attract attention in the trade and shipping industrie ...
Monday, 01 February 21
A 56,000-DWT OPEN MANILA WAS FIXED FOR A TRIP VIA INDONESIA REDELIVERY CHINA AT $11,500 - THE BALTIC BRIEFING
Capesize
The Capesize routes endured a week of slippage on rates, bringing the market back down to levels seen at the beginning of the month. D ...
Monday, 01 February 21
PAKISTAN: COAL DEMAND EXPECTED TO SPIKE IN 2021 - DAWN
Coal demand is expected to remain upbeat in 2021 as more coal-fired and captive power plants are coming up in the current year.
Acco ...
Friday, 29 January 21
COAL EXPORTS FROM AUSTRALIA TO MAINLAND CHINA DECLINED BY -22.2% Y-O-Y IN 2020 - BANCHERO COSTA
In the 12 months of 2020, global seaborne coal trade declined by as much as -12.7% year-on-year, according to vessel tracking data from Refinitiv, ...
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- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Marubeni Corporation - India
- Aditya Birla Group - India
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- The Treasury - Australian Government
- PTC India Limited - India
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Parliament of New Zealand
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Latin American Coal - Colombia
- MS Steel International - UAE
- Merrill Lynch Commodities Europe
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Samtan Co., Ltd - South Korea
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
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