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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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Wednesday, 02 September 20
INDONESIA COAL PRICE REFERENCE DIVES FURTHER IN SEPTEMBER DUE TO SUBDUED DEMAND & GLOBAL OVERSUPPLY
Subdued demand & global oversupply pushed down this month's HBA
COALspot.com: The Indonesia Coal Price Reference ...
Tuesday, 01 September 20
WHY INDIA CAN'T MATCH THE GULF REGION'S RECORD-LOW SOLAR TARIFFS - IEEFA
5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
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- Chettinad Cement Corporation Ltd - India
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Bharathi Cement Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
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