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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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Thursday, 11 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 ...
Tuesday, 09 November 21
ASIA-PACIFIC IS HOME TO SOME OF THE WORLD'S LARGEST CARBON-EMITTERS - 2 CHARTS SHOW ITS RELIANCE ON COAL - CNBC
Asia-Pacific is home to some of the world’s largest carbon emitters — and experts say much of global efforts to fight climate change de ...
Tuesday, 09 November 21
CHINA DAILY COAL OUTPUT HITS MULTI-YEAR PEAK, PRICES EXPECTED TO FALL - REUTERS
China’s daily coal output hit 11.93 million tonnes last week, a multi-year high as more capacity returned to operation, the state planner sai ...
Thursday, 04 November 21
CHINA'S COAL MARKET SEES SIGNIFICANT IMPROVEMENTS: NDRC - GLOBAL TIMES
China’s top economic planner has declared initial success in its efforts to ensure coal supply and stabilize prices, saying that daily coal o ...
Thursday, 04 November 21
CHINA THERMAL COAL PRICES RISE AFTER FALLING FOR 10 DAYS - REUTERS
China thermal coal futures rebounded on Wednesday after falling for 10 days on an expected jump in fuel demand to meet heating needs amid forecasts ...
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- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- VISA Power Limited - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- PTC India Limited - India
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- The University of Queensland
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- India Bulls Power Limited - India
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
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