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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
 Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to see that dry bulk Q4 high seasonality has returned after at least 3 years of underperformance, driving also the Q4’21 and Q1’22 FFA curve to multi year highs. Back in May, we had explained why we thought a higher Cape market peak during 2H2021 was in the cards, with fundamentals recently being boosted by accelerating restocking demand, near record high Capesize congestion at Pacific discharge ports and a global energy supply deficit leading to scrambling for coal supplies globally. In the present insight, we are briefly addressing some of the market points that are likely to impact the direction of freight rates looking forward.
Iron Ore restocking to be in full swing during Q4 regardless of China’s crude steel production contraction. Q1 2022 Risks: Slow-down in construction during winter and in view of China’s Winter Olympics, exacerbated by high energy costs. China’s property developers slowing down land purchases amid deleveraging efforts
The primary force behind the crude steel production decline in the short term is the severe coking coal /coke and power shortage forcing crude steel production to adjust downwards. Cuts are expected to intensify from November 15th to the end of the year as a 1st stage and then through March 2022, as per government’s pledges. Even if most of the targeted steel production cuts materializes through Sep-Dec 2021, probabilities that they will immediately translate into a decline in iron ore requirements are low, as 1) the iron ore restocking process is directly connected to iron ore seaborne supplies which are the strongest during Q4 – the decline in iron ore prices from multi year highs in May 2021 is currently facilitating the restocking process supporting the purchasing power of steel mills – steel mills margins remain strong due to the diverging trends in steel and iron ore prices, despite the surge in coking coal costs 2) Skyrocketing energy costs are likely to negatively impact more the scrap related steel production process during the quarter (Electric Arc Furnaces are higher energy consumers) vs Blast Furnaces (more iron ore requirements). When iron ore restocking will be completed, this will be a negative signal for new iron ore procurement, likely during the 1H2022. On this note, iron ore inventories at China’s ports have increased by +9.2 million tons since the end of Q2 and there is more room for them to inflate further by the end of the year.
Inflationary pressures on the energy complex supportive to dry bulk freight rates in the short-term. Q1 2022 Risks: La Nina conditions might bring a colder winter supporting coal consumption but also wetter conditions in Australia from December to April increasing risks of exports disruptions
Natural gas prices have raised the price ceiling higher for the whole energy complex and while international coal prices have hit record high levels, the price gap with natural gas continues to incentivize substitution in power generation globally and Europe particularly. The competition for securing coal supplies in both basins has inflated $ per ton freight across major coal routes to 12-year highs – which we think is sustainable - as the % of freight in coal prices is still low (approx. 13%) compared to 2009-2010 (approx. 22%).
China’s domestic coal output is expected to increase in the next months on a series of government measures to boost supplies, although the incremental volumes during Q4 are not expected to be sufficient to cover the supply deficit. The continuous decline in coal inventories at major power plants and expectations for a cold winter continue to indicate increasing thermal coal import needs for restocking in the winter heating season. Demand for coal imports is further enhanced by India’s urgency to restock as inventories at power plants have dropped to the lowest level since 2017 at 7.3 million tons but at a record low in terms of days of consumption i.e. just 4 days, as per latest data from India’s Central Electricity Authority.
High bunker prices are supportive to dry bulk freight rates as we had discussed in our May insight, likely to exacerbate fleet inefficiencies across the basins, with the Atlantic expected to benefit more in the short term. Talks about demand destruction from high oil prices will be substantiated when manufacturers’ profitability and consumers’ purchasing power starts to be negatively impacted with costs curves rising upwards. This is likely to take place at higher prices than the current $80/bbl in our view and those would have to be sustained during the quarter.
By Tamara Apostolou, Research Director
Compiled by:
Intermodal Research & Valuations
Analysts:
Yiannis Parganas
Tamara Apostolou
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, 24 September 20
SUPRAMAX: INDO TO INDIA FIXING AROUND US$13,000 - FEARNLEYS
Cape
Over the last week the iron ore segment from Brazil to China has picked up, and we see freight rates up USD 2 (12%) week on week Fearnleys ...
Thursday, 24 September 20
KOREA MIDLAND POWER TO BUY 1.92 MILLION TONS OF 4,300-4,700 NCV COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 640,000 MT 4,300-4,700 kcal/kg NCV coal per year.
...
Wednesday, 23 September 20
VIETNAM'S NEW POWER DEVELOPMENT PLAN MUST OPTIMIZE RENEWABLES AND AVOID FOSSIL FUEL LOCK-IN: IEEFA
EVN’s financial constraints leaves the utility with little room for error
Implementing Vietnam’s soon-to-be-launched next Power De ...
Wednesday, 23 September 20
MARKET INSIGHT - INTERMODAL
Undoubtedly, this year (ongoing) will never be forgotten because in a matter of months it has managed to severely affect and shape our day to day p ...
Friday, 18 September 20
INDIA'S COAL-FIRED POWER OUTPUT PICKS UP AS INDUSTRIAL USE RISES - REUTERS
India’s coal-fired electricity generation rose 9.4% in the first half of September, provisional government data showed, as demand from indust ...
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- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Parliament of New Zealand
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Economic Council, Georgia
- The University of Queensland
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