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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, 15 October 21
GLOBAL STEEL DEMAND GROWTH DOWNGRADED FOR 2021 DUE TO CHINA - WORLD STEEL ASSOCIATION
The World Steel Association (worldsteel) today released an update of its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that ste ...
Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten ...
Thursday, 14 October 21
EIA FORECASTS U.S. COAL PRODUCTION TOTALS 588 MMST IN 2021, UP 53 MMST YOY
U.S. coal production in EIA's forecasts totals 588 million short tons (MMst) in 2021, 53 MMst more than in 2020.
According ...
Wednesday, 13 October 21
COAL PRICES ARE ROARING BACK AMID A GLOBAL ENERGY CRUNCH - SYDNEY MORNING HERALD
Soaring coal prices have placed Australia’s mining and energy exports on track to reach a record $349 billion this year evenas the value of t ...
Wednesday, 13 October 21
CHINA ISN'T THE ONLY HUGE ASIAN ECONOMY WITH A COAL SHORTAGE NOW - CNBC
China is not the only Asian giant grappling with an energy crunch — India is also teetering on the edge of a power crisis.
Mos ...
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- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- The University of Queensland
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Economic Council, Georgia
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
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