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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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Tuesday, 28 September 21
THE MAIDEN EDITION OF DIVE TECHNOLOGY SUMMIT 2021 CONCLUDES SUCCESSFULLY
Press Release: DIVE TECHNOLOGY SUMMIT 2021, a one-day conference on the recent technological advancements in the Industrial Diving industry conclud ...
Monday, 27 September 21
CHINESE COAL FIRMS MEET TO ADDRESS WINTER SUPPLY CHALLENGES - CNBC
Major Chinese coal producers are trying to resolve supply shortages and curb price rises as the country’s winter consumption peak approaches, ...
Saturday, 25 September 21
HIGH STAKES FOR ASIAN DEVELOPMENT BANK’S AMBITIOUS COAL POWER RETIREMENT PLAN - IEEFA
Implementation challenges could block funding for other equally important high impact clean energy funding strategies
In the lead up ...
Thursday, 23 September 21
LONGER COAL CONTRACTS MAY REIN IN PRICES - ECNS
In China’s coal sector that has been marred recently by price surges, regional authorities and related enterprises should ensure the fuel con ...
Thursday, 23 September 21
BALTIC INDEX HITS 12-YEAR PEAK ON FIRMER VESSELS RATES - REUTERS
The Baltic Exchange’s main dry bulk sea freight index rose for a fourth straight session on Wednesday to a 12-year high, buoyed by higher rat ...
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- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indogreen Group - Indonesia
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Parliament of New Zealand
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Australian Coal Association
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
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