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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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Tuesday, 16 November 21
INDONESIA’S 2022 COAL USE FOR POWER GENERATION SET TO RISE 3% - REUTERS
Indonesia’s coal consumption for power generation is likely to rise by 3.1% next year compared to 2021, the head of the country’s state ...
Tuesday, 16 November 21
CHINA'S MONTHLY COAL OUTPUT RISES TO HIGHEST SINCE MARCH 2015 - REUTERS
China’s October coal output rose to the highest since at least March 2015, after Beijing approved a raft of coal mine expansions to tame reco ...
Friday, 12 November 21
RUSSIA-INDIA COKING COAL DEAL UNLIKELY TO IMPACT PANAMAX SHIPPING - DREWRY
Russia and India have recently entered into an agreement whereby Russia will supply up to 40 million tonnes of coking coal to India every year. Dre ...
Friday, 12 November 21
ASIA COAL POWER PIPELINE TO SHRINK BY TWO THIRDS AFTER CHINA FINANCE CUT - REUTERS
Asia’s pipeline of proposed coal-fired power plants is expected to shrink from 65 gigawatts to 22 gigawatts following China’s pledge to ...
Friday, 12 November 21
INDONESIAN COAL PRICE REFERENCE TOPS $215 A TON; THE HIGHEST COAL PRICE IN HISTORY
COALspot.com: Indonesian Coal Price Reference in a steep climb for most of second half of 2021 as it reached a pinnacle of $215.01 in November 2021 ...
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- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Tamil Nadu electricity Board
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Mercuria Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
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