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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, 01 November 21
COAL PRICES HAVE FURTHER ROOM TO DROP: TOP ECONOMIC PLANNER - GLOBAL TIMES
China’s top economic planner said coal prices have further room to drop on Friday, as the most traded coal futures dropped to below 1,000 yua ...
Saturday, 30 October 21
CHINA'S COAL PRICES SEE BIGGEST WEEKLY FALL IN MORE THAN 5 YEARS - REUTERS
China’s coal futures prices saw their biggest fall in more than five years after the powerful state planner said there is still room to adjus ...
Saturday, 30 October 21
G-20 LEADERS PREPARE STATEMENT TO STOP FUNDING FOREIGN COAL PLANTS - BLOOMBERG
Leaders of the Group of 20 wealthy economies are preparing to pledge to stop funding foreign coal-fired plants, but are still wrangling over climat ...
Friday, 29 October 21
APAC THERMAL COAL SUPPLY TO REMAIN TIGHT AS WINTER LOOMS - FITCH RATINGS
APAC thermal coal prices have surged, hitting historically high levels. The benchmark Newcastle 6,000kcal/kg grade coal reached USD228/tonne in mid ...
Thursday, 28 October 21
CANADA BAN ON SHIPPING COAL WOULD EQUAL SCRAPPING AS MANY AS 3 MILLION CARS - IEEFA
Canada ban on shipping coal would equal scrapping as many as 3 million cars
Change in Canadian policy could have major implications ...
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- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Australian Coal Association
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
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