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Friday, 21 May 21
MARKET INSIGHT - INTERMODAL
 The dry bulk market’s counter seasonal surge so far into the first half of the year -in a sort of 2010 manner - and Capesize’s recent retreat from almost 11-year highs is raising the question whether a counter seasonal market drop is in the cards during the 2H of the year in the context of a broader market upcycle.
While the market is multi-factorial with fundamentals, sentiment and inter-freight correlation amongst sizes feeding one another, the current Cape market correction was exacerbated after Chinese authorities intervened to curb iron ore price speculation. A subsequent sharp reversal of iron ore and steel prices from record highs and FFAs selling off contributed to pulling the Cape market lower, while the smaller segments were unaffected. It is well known that Capesize is characterized by the highest freight volatility and even though that we expect volatility to keep up, we are not convinced that this is the turning point for a prolonged market correction. Fundamentals are likely to outlast volatility and we cannot exclude that the next leg higher will find a much higher peak over the next two quarters with cargo export seasonality emerging stronger across all commodities and particularly iron ore.
Iron Ore exports to accelerate in 2H2021; the urge for higher quality iron ore is likely to intensify: China’s iron ore inventories have been destocked by more than 8.0 million tons over the past month amid elevated demand and major iron ore miners running behind their export guidance, likely to trigger a new restocking wave. Forward iron ore prices on the curve, even if spot iron ore prices softened from here, incentivize iron ore miners to accelerate exports during the 2H2021.
So far, China’s emissions regulations on steel production were unsuccessful in containing it. Record high steel mills margins incentivized higher steel production ex. strictly regulated Tangshan with YTD Jan-Apr crude steel production up +15.6% y-o-y. If steel production controls intensify during the second half, this will further increase demand for high quality iron ore, in order to optimize the steel process. In addition, the scrap scramble from steel mills outside China could put a lid on China’s increasing scrap usage in the steel mix in the short term.
Macro indicators continue to be bullish for dry bulk demand in the next quarters: China’s Property new starts - a leading indicator of steel demand – have increased +19.0% YTD in 2021, while April’s y-o-y growth slowed down at +9.3% y-o-y. Any slow down in the growth of new floor space under construction will not immediately translate into lower steel and iron ore demand; developers are likely to accelerate property completions from now on continuing to drive demand.
Other than China, global steel production and demand conditions are robust, reflected by record high steel prices both in the US and Europe. Spot and forward steel prices have surged, giving steel mills the opportunity to hedge at profitable levels, therefore global steel production will continue to expand.
Global manufacturing PMIs are at 10 year cycle highs, despite having softened during April and lead demand for commodities. Oil prices have been lagging the rise in other commodities and are projected to increase significantly over the next two quarters, which could provide further support to the dry bulk market via - and not limited to - the bunker-$ per ton freight- speed relation. Fundamentals of other dry bulk commodities are also robust, with electricity generation set to accelerate over the summer in addition to increased industrial production, while China’s domestic coal production is underperforming amid mine safety checks.
Early signs of credit tightening: Following a record high stimulus over the previous year, latest credit growth figures in China indicate a slow-down in credit supply during April, however as long as inflation at the producers level accelerates the tightening impact is muted in our view. China’s potential deleveraging from here should not be expected to have a negative effect on dry bulk commodities demand, until credit tightening starts to interfere with producers’ profit margins.
Last but not least, China’s political tension with Australia is more likely to translate into higher ton-miles in the medium term, with Atlantic production of high-quality iron ore and coal substituting for any potential loss of Australia’s market share. In the longer term, China’s 14th year plan that calls for an increase of electric arc furnaces (scrap) in steel production to 15-20% by 2025 and self sufficiency share of iron ore above 45% will certainly have an impact in the way iron ore is procured with China having higher control over both supply and iron ore prices.
by Tamara Apostolou,
Research Analyst
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
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, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Thai Mozambique Logistica
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Coalindo Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- The University of Queensland
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Independent Power Producers Association of India
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhoruka Overseas - Indonesia
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
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