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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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Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
Saturday, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
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- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- The University of Queensland
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- PTC India Limited - India
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Aditya Birla Group - India
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
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