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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, 14 August 20
EIA: COAL PLANTS UNECONOMICAL IN MOST REGIONS - IEEFA
U.S. coal power generation plunged by 30 percent in the first half of 2020 off an already-depressed base, shoved out by natural gas and renewables ...
Thursday, 13 August 20
INDIA SHOULD RECORD A SLIGHT DECREASE IN THERMAL COAL IMPORTS, REACHING A VOLUME OF 167 MILLION TONS BY THE END OF 2020 - ASSOCARBONI
Regarding 2020 thermal coal imports forecasts, Vietnam’s coal imports showed a very strong growth in the first half of 2020 and it is believe ...
Thursday, 13 August 20
INDONESIA REMAINS THE LARGEST EXPORTER OF COAL IN THE WORLD - ASSOCARBONI
According to the last Assocarboni data for 2019, Indonesia remains the largest exporter in the world. Thermal coal exports have in fact reached 456 ...
Wednesday, 12 August 20
VIETNAM WAS THE PROTAGONIST OF A SIGNIFICANT INCREASE IN COAL IMPORTS IN 2019 - ASSOCARBONI
The latest Assocarboni data for 2019 also provide a detailed picture on the trend of the global coal import.
According to Assocarbon ...
Wednesday, 12 August 20
THE COAL MARKET IN ITALY - ASSOCARBONI
Italy, which in 2019 reported a decrease in thermal coal imports, with a volume of 7,5 million tons (-32% compared to 11 million tons in 2018), whi ...
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- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Australian Coal Association
- Xindia Steels Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- The University of Queensland
- Parliament of New Zealand
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ceylon Electricity Board - Sri Lanka
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Meenaskhi Energy Private Limited - India
- Borneo Indobara - Indonesia
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dalmia Cement Bharat India
- Central Electricity Authority - India
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