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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, 22 October 21
CHINA WANTS TO COOL COAL PRICES. SIMILAR MOVES FOR METALS, CRUDE FAILED - REUTERS
China’s latest attempt to lower runaway commodity prices, this time for thermal coal, is likely to follow a familiar pattern of initial succe ...
Friday, 22 October 21
HARD COAL REMAINS AN IMPORTANT FACTOR FOR SECURITY OF SUPPLY - COAL IMPORTERS ASSOCIATION, GERMANY
- Hard coal remains an important factor for security of supply
- Increase of around 35% in hard-coal-fired power generation in the first three ...
Wednesday, 20 October 21
CHINA'S COAL SHORTAGE TO EASE IN COMING MONTHS, INDUSTRY BODY SAYS - REUTERS
China’s coal shortage will likely ease in coming months, with domestic production and imports already showing signs of picking up, a coal ind ...
Wednesday, 20 October 21
CHINA'S RAW COAL OUTPUT DROPS IN SEPTEMBER - XINHUA
China’s raw coal output dropped 0.9 percent year on year to 330 million tonnes last month, data from the National Bureau of Statistics (NBS) ...
Wednesday, 20 October 21
OVER-RELIANCE ON COAL IN OUR POWER MIX HURTING INDIA - LIVEMINT
In spite of the renewables push, coal still accounts for about 50% of India’s installed power capacity. That means a simultaneous demand and ...
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- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Eastern Energy - Thailand
- Binh Thuan Hamico - Vietnam
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
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