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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, 04 November 21
FASTER DECARBONISATION: BACK TO BASICS FOR THE MINING INDUSTRY? - WOOD MACKENZIE
To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the ...
Wednesday, 03 November 21
CHINA TO LAUNCH NEW DATA MONITORING SYSTEM, TARGETING COAL MARKET SPECULATION, HOARDING - GLOBAL TIMES
China’s top economic planner announced on Sunday a new data system for supervising the implementation of medium- and long-term contracts of c ...
Wednesday, 03 November 21
CHINA’S STATE PLANNER SAYS COAL SUPPLY IMPROVING, PRICES STABILISING - REUTERS
China’s coal supply situation has seen significant improvement with joint efforts from coal producers, logistics and downstream users, while ...
Wednesday, 03 November 21
HIGHER COKING COAL PRICES TO PARE PROFITABILITY OF STEELMAKERS IN SECOND HALF OF FY22 - CRISIL RATINGS
The operating margin of primary steelmakers will reduce by a third to 24-26% in the second half of this fiscal versus the first half as input cost ...
Wednesday, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
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- Globalindo Alam Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- The University of Queensland
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Parry Sugars Refinery, India
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Aditya Birla Group - India
- Australian Coal Association
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