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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, 11 October 21
COAL ABANDONMENT IN POWER GENERATION PROMOTED GAS DEMAND GROWTH IN EUROPE - TOP MANAGER: TASS
Accelerated abandonment of coal in power generation and the overall recovery of economic activity facilitated gas demand growth in Europe and led t ...
Saturday, 09 October 21
CHINA POWER CUTS: COAL MINERS ORDERED TO BOOST OUTPUT, SAY REPORTS - BBC
Beijing has reportedly ordered China’s coal mines to boost output as an energy shortage across the country has seen millions of homes and bus ...
Friday, 08 October 21
SEPTEMBER CRUDE OIL TANKER DEMOLISHING HITS 39-MONTHS HIGH AT 1.9M DWT - PETER SAND
Has the lid finally come off for crude oil tanker demolition in 2021? If judged by the 1.9m DWT of capacity that was removed in September, the answ ...
Friday, 08 October 21
COAL SHORTAGE MAY LEAD TO RISE IN STEEL PRICES IN COMING MONTHS: JSPL MD - PTI
Steel prices are expected to increase in the coming months as companies are buying coal at three times the rates a month ago, said a top industry e ...
Wednesday, 06 October 21
INDONESIA COAL PRICE REFERENCE: ANOTHER MONTH, ANOTHER RALLY
COALspot.com: Indonesian Coal Price Reference in a steep climb for most of second and third quarters of 2021 as it reached a pinnacle of $161.63 Oc ...
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- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Thai Mozambique Logistica
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Toyota Tsusho Corporation, Japan
- Orica Australia Pty. Ltd.
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Planning Commission, India
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Independent Power Producers Association of India
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