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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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Saturday, 16 October 21
DESPITE HIGHER COAL PRICES, U.S. COAL RECOVERY LOOKS WEAK BY MOST MEASURES - IEEFA
U.S. coal sector is locked into a long-term sectoral decline
Coal prices have surged to the highest level in years in the U.S., and have soare ...
Saturday, 16 October 21
COAL IS 'KING' AS GAS PRICES SOAR, TOTAL CEO SAYS - AND IT’S BACKFIRING ON CLEANER ENERGY GOALS - CNBC
Surging natural gas prices have led to a jump in coal use, with plants in Europe and Asia firing back up as temperatures decline and the world grap ...
Saturday, 16 October 21
VIETNAM'S COAL-FIRED POWER MAY DOUBLE BY 2030 UNDER DRAFT ENERGY PLAN - REUTERS
Vietnam may double the amount of coal-fired electric generation it installs by 2030 under a draft power development plan submitted to the prime min ...
Friday, 15 October 21
AUSTRALIA'S WHITEHAVEN EXPECTS TO BE DEBT-FREE NEXT YEAR AS COAL PRICES SOAR - REUTERS
Australia’s Whitehaven Coal WHC.AX said on Thursday it expects to be debt-free by early 2022, as thermal coal prices surge to record highs on ...
Friday, 15 October 21
WINTER CHILL KEEPS CHINA'S COAL PRICES HIGH, POWER CRUNCH STOKES INFLATION - REUTERS
China coal prices held near record highs on Thursday as cold weather swept into the country’s north and power plants stocked up on the fuel t ...
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- Chamber of Mines of South Africa
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- White Energy Company Limited
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- CNBM International Corporation - China
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- The State Trading Corporation of India Ltd
- The University of Queensland
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Planning Commission, India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Altura Mining Limited, Indonesia
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