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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, 26 May 21
NEW POWER AND ENERGY MASTER PLAN MUST BE DESIGNED IN BANGLADESH'S BEST INTERESTS, NOT JAPAN'S - IEEFA
JICA must deliver a low or zero emissions plan as promised, not fund Matarbari 2 coal plant
Clear understandings from the Bangladesh ...
Tuesday, 25 May 21
KOREA SOUTHERN POWER INVITED BIDS FOR 870,000 MT OF MIN 5300 NCV COAL FOR 2021 TO 2023.
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for total 870,000 MT of Min 5,300 kcal/kg NCV coal for Augu ...
Tuesday, 25 May 21
CHINA’S COAL OUTPUT RISES IN FIRST FOUR MONTHS - XINHUA
China’s raw coal output rose 11.1 percent year on year to 1.29 billion tonnes in the first four months of 2021, official data showed.
&nb ...
Tuesday, 25 May 21
MARINE SHIPPERS BULK UP: ANOTHER GAME OF CHICKEN IN THE WORKS? - THE KOREA TIMES
Global shipping companies have been placing orders for large ships, with many anticipating further increased competition within the next three year ...
Wednesday, 12 May 21
U.S. COAL PRODUCTION TO INCREASE BY 43 MMST IN 2021 TOTAL 582 MILLION SHORT TONS - EIA
U.S. energy Information Administration expects U.S. coal production to total 582 million short tons (MMst) in 2021, 43 MMst (8%) more than in 2020. ...
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- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Meralco Power Generation, Philippines
- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- PTC India Limited - India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Riau Bara Harum - Indonesia
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Videocon Industries ltd - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- The University of Queensland
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Sojitz Corporation - Japan
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Minerals Council of Australia
- Indika Energy - Indonesia
- Posco Energy - South Korea
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
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