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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- OPG Power Generation Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Kepco SPC Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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