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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, 23 July 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 1.36 MILLION TONS OF BITUMINOUS COAL FOR OCTOBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 1,360,00 ...
Wednesday, 22 July 20
CIL'S COAL SUPPLY TO POWER SECTOR DROPS OVER 21% TO 93.5 MT IN APR-JUN QUARTER - PTI
The supply of coal by state-owned Coal India Ltd to the power sector fell 21.7 percent to 93.5 million tonnes (MT) in the first quarter of the ongo ...
Monday, 20 July 20
KOREA MIDLAND POWER INVITED BIDS FOR TOTAL 2.520 MILLION MT OF BITUMINOUS COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO), has issued an international tender for total 840,000 of Bituminous Coal to be used at Bo ...
Monday, 20 July 20
CHINA'S JUNE COAL OUTPUT FALLS 1.2% YEAR-ON-YEAR OVER ILLEGAL MINING CHECKS - REUTERS
China’s coal output dropped 1.2% in June on the year to 330 million tonnes, official data showed, as major coal mining areas cracked down on ...
Monday, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
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- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Manunggal Multi Energi - Indonesia
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Ambuja Cements Ltd - India
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Australian Commodity Traders Exchange
- The University of Queensland
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Sical Logistics Limited - India
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
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