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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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Thursday, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, ...
Wednesday, 22 September 21
MARKET INSIGHT - INTERMODAL
The unfolding last week of a trilateral defence pact between the United States, Australia, the United Kingdom (AUKUS) envisages a wide range of col ...
Tuesday, 21 September 21
CHINESE COAL IMPORTS FROM AUSTRALIA DROP 98.6% AS RESTRICTIONS BITE - BIMCO
In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian c ...
Tuesday, 21 September 21
CHINA'S COAL OUTPUT RESUMES GROWTH IN AUGUST - XINHUA
China’s raw coal output rose 0.8 percent year on year to 340 million tonnes last month, official data showed.
The growth rate ...
Wednesday, 15 September 21
MARKET INSIGHT - INTERMODAL
Following the oil price sell off during most of August, partly triggered by oil demand fears amid the delta COVID variant, oil prices have resumed ...
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- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ambuja Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Sinarmas Energy and Mining - Indonesia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- VISA Power Limited - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Australian Coal Association
- Eastern Energy - Thailand
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- The University of Queensland
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
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