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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, 20 August 20
MINER BHP CONFIRMS PLANS TO EXIT THERMAL COAL SECTOR - THE SYDNEY MORNING HERALD
The head of mining giant BHP has laid out plans for a reshaping of its global operations by seeking to quit thermal coal mining, offload some cokin ...
Thursday, 20 August 20
LONDON RETAINS ARBITER CROWN - BALTIC EXCHANGE | HFW
Fears that the UK’s decision to leave the European Union would dent the reputation of the nation’s capital as the leader in maritime ar ...
Wednesday, 19 August 20
U.S. COAL STOCKPILES STEADILY INCREASE AFTER REACHING LOWEST LEVEL IN A DECADE IN 2019 - EIA
After reaching their lowest level in more than a decade in March 2019, U.S. coal stockpiles steadily increased to 152 million tons in April 2020, r ...
Wednesday, 19 August 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.26 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.92 points Monday, down 0.26 percent week on week.
The index, released by Chi ...
Wednesday, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- ASAPP Information Group - India
- Parliament of New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Economic Council, Georgia
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- PTC India Limited - India
- Indika Energy - Indonesia
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Eastern Coal Council - USA
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
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