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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, 15 January 21
OVER US$50 BILLION IN GAS POWER PROJECTS AND LNG IMPORT FACILITIES AT RISK OF CANCELLATION IN BANGLADESH, PAKISTAN AND VIETNAM - IEEFA
Pakistan and Bangladesh have already cancelled tenders for LNG imports
Emerging markets such as Vietnam, Pakistan and Bangladesh tha ...
Friday, 15 January 21
VIETNAM'S EXTRAORDINARY ROOFTOP SOLAR SUCCESS DEALS ANOTHER BLOW TO THE REMAINING COAL PIPELINE - IEEFA
9.3 gigawatts peak of solar capacity, equal to 6 coal power plants, installed in less than a year
Vietnam’s solar power indust ...
Friday, 15 January 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 14 January 21
KOREA MIDLAND POWER INVITED BIDS FOR AUSTRALIAN COAL FOR THREE YEARS SUPPLY
COALspot.com: Korea Midland Power Co. Ltd, issued an International tender for total 1,560,000 MT of Min.5,700 kcal/kg NCV coal of Australian Origin ...
Wednesday, 13 January 21
CHINA THERMAL GENCO PROFITS FACE PRESSURE AMID POWER SHORTAGES - FITHCH WIRE
High coal and gas prices will put near-term pressure on margins for thermal power generators in China, says Fitch Ratings. However, the power short ...
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- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Independent Power Producers Association of India
- The University of Queensland
- Marubeni Corporation - India
- MS Steel International - UAE
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Indian Oil Corporation Limited
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- PTC India Limited - India
- SMG Consultants - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
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