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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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Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
Friday, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
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- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- PTC India Limited - India
- Romanian Commodities Exchange
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Aditya Birla Group - India
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Star Paper Mills Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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