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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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Friday, 04 September 20
KOMIPO INVITED BIDS FOR AUSTRALIAN MIN 5,700 NCV COAL FOR NOVEMBER
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 260,000 MT Min.5,700 kcal/kg NCV coal November, 2020 loading. Acc ...
Thursday, 03 September 20
BRINGING SERVICES OF FTCCI CLOSER TO THE EXPORTERS AT GMR AIR CARGO COMPLEX AT SHAMSHABAD
Press Release: “FTCCI Trade Facilitation Services at your doorstep now” says J.S. Chandrashekar, IRS., Principal Commissioner of Custom ...
Thursday, 03 September 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 02 September 20
COAL PRODUCTION FALLS 7% IN APR-AUG; OFF TAKE DIPS 13.4% - FINANCIAL EXPRESS
In the month of August coal off take also increased 9.3% y-o-y to 44.34 MT as compared with 40.57 MT in the same period last year.
C ...
Wednesday, 02 September 20
MARKET INSIGHT - INTERMODAL
The imminent global shift towards eco-friendliness has caused divide among the shipping community because there is no outlined, clear-cut way via w ...
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- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Parliament of New Zealand
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- GMR Energy Limited - India
- Australian Coal Association
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- PTC India Limited - India
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Energy Link Ltd, New Zealand
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
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