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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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Friday, 29 January 21
OPEC+, COVID-19 AND ENERGY TRANSITION - 3 THEMES IMPACTING OIL MARKETS AND REFINING IN 2021 - WOOD MACKENZIE
Wood Mackenzie’s latest outlook report shows that the art of balancing oil markets and the refining sector in 2021 hinges upon three key them ...
Thursday, 28 January 21
STRONG CHINESE THERMAL COAL IMPORTS TO BENEFIT INDONESIAN MINERS IN THE NEAR TERM - FITCH RATINGS
China's thermal coal imports are likely to remain strong ahead of the Chinese New Year in mid-February on robust demand, high utilisation at do ...
Thursday, 28 January 21
WIND PROPULSION FOR DRY BULK CARRIERS - OLDENDORFF
Oldendorff Carriers (OC) has signed a Joint Development Project (JDP) with Anemoi Marine Technologies (Anemoi), Lloyd’s Register (LR) and Sha ...
Thursday, 28 January 21
BUMA PRICED A USD400 MILLION 7.75% 5-YEAR SENIOR NOTES
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama priced a USD400 million 5-year (non-callable 2-year)& ...
Wednesday, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
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- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
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