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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, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
Saturday, 11 September 21
RECORD CHINESE COAL FUTURES SIGNAL NEED TO BOOST OUTPUT - REUTERS
China’s coal prices have climbed to a record high, signaling the need for more production in the short term, even as the government tries to ...
Saturday, 11 September 21
IN 2022, EIA EXPECTS U.S. COAL PRODUCTION TO INCREASE BY 47 MMST TO 648 MMST
U.S. Coal production accordng to EIA's forecast, totals 601 million short tons (MMst) in 2021, 66 MMst more than in 2020, EIA's Short-Term ...
Wednesday, 08 September 21
FITCH RATINGS RAISES THERMAL COAL PRICE ASSUMPTIONS ON TIGHT SUPPLY
Fitch Ratings has increased all its Qinhuangdao 5,500kcal/kg price assumptions and short- and medium-term Newcastle 6,000kcal/kg price assumptions ...
Wednesday, 08 September 21
COAL IS STILL KING; INDONESIAN COAL PRICE REFERENCE ABOVE $150 FOR FIRST TIME IN HISTORY
COALspot.com: The Indonesian Coal Price Reference rose dramatically from US$ 127.05 in February 2011, to a peak of US$ 150.03 in September 2021, be ...
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- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- LBH Netherlands Bv - Netherlands
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Minerals Council of Australia
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Sical Logistics Limited - India
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Deloitte Consulting - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Merrill Lynch Commodities Europe
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- IHS Mccloskey Coal Group - USA
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
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