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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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Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
Friday, 21 August 20
BHP COMMITS TO SELLING ITS THERMAL COALMINES WITHIN TWO YEARS - THE GUARDIAN
Move follows pressure from investors but company stops short of full exit from coalmining
BHP has announced it plans to sell off its ...
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- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Malabar Cements Ltd - India
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Coal and Oil Company - UAE
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Petron Corporation, Philippines
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
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