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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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Friday, 12 March 21
BATTERIES ARE REPLACING COAL NOT GAS - IEEFA
No amount of government subsidies can halt gas’s decline
Batteries are replacing coal not gas.
Today the early ...
Friday, 12 March 21
RENEWABLES SHOULD BE FOCUS OF VIETNAM’S DRAFT PDP8, NOT COAL AND GAS - IEEFA
Evidence was clear to inform the next stage of Vietnam’s power development
Vietnam’s recently published draft power deve ...
Thursday, 11 March 21
U.S. TO PRODUCE 581 MMST IN 2021, UP 8% FROM 2020 - EIA
EIA expects U.S. coal production to total 581 MMst in 2021, 42 MMst (8%) more than in 2020. In 2022, EIA expects coal production to rise by a furth ...
Thursday, 11 March 21
MARKET INSIGHT - INTERMODAL
Assessing the ship repair sector during the first months of 2021, we have come across a new era in which Owners chose the shipyards to repair their ...
Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
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- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- PTC India Limited - India
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- MS Steel International - UAE
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- GMR Energy Limited - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
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