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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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Sunday, 18 April 21
WORLDSTEEL RAISES 2021 STEEL DEMAND GROWTH FORECAST TO 5.8% - WORLDSTEEL
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...
Sunday, 18 April 21
CHINA'S Q1 COAL OUTPUT RISES 16% ON STRONG DEMAND FOR WINTER HEATING - REUTERS
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...
Wednesday, 14 April 21
INDIA HAS A RECORD LEVEL OF STOCKPILED COAL DAMPENING NEED FOR NEW DOMESTIC MINES - IEEFA
Proposed coal mining expansions at odds with excess supply
India has stockpiled a record 132 million tonnes of coal – enough t ...
Wednesday, 14 April 21
BANGLADESH NEEDS A RENEWABLES FOCUS, NOT A SWITCH FROM 'COAL TO GAS' - IEEFA
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations
The emerg ...
Wednesday, 14 April 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 1.10 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.05 points Monday, down 1.10 percent week on week.
The index, released by Chi ...
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- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
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