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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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Tuesday, 23 March 21
LOWER WHOLESALE PRICES PUT PRESSURE ON AUSTRALIAN ENERGY RETAILERS - FITCH RATINGS
Fitch Ratings expects the low wholesale energy prices in the Australian National Energy Market to persist through to 2022, which will affect electr ...
Tuesday, 23 March 21
SCRUBBER-FITTED SHIPS NEARLY DOUBLE AS FUEL SPREAD SETTLES AT $118 PER MT - PETER SAND
As the lion’s share of the world fleet replaced high-sulphur fuel oil (HSFO) with low-sulphur fuel oil (LFSO) as a mean of propulsion to be c ...
Tuesday, 23 March 21
CHINA'S COAL OUTPUT EDGES UP IN FIRST TWO MONTHS - XINHUA
China’s raw coal output rose 25 percent year on year to 620 million tonnes in the first two months of 2021, official data showed.
...
Wednesday, 17 March 21
MARKET INSIGHT - INTERMODAL
Shipping market players are familiar with the inverse correlation between the freight market and demolition activity i.e. when the market picks up ...
Friday, 12 March 21
INDIA SHOULD FOCUS ON REDUCING COAL POWER GENERATION INSTEAD OF CAPACITY - IEEFA
Nearly half of existing coal power in India is more expensive than new renewable power
To get to its ambitious climate targets, Indi ...
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- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- The University of Queensland
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Indian Oil Corporation Limited
- Eastern Energy - Thailand
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- VISA Power Limited - India
- Indika Energy - Indonesia
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Miang Besar Coal Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
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