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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, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
Wednesday, 24 February 21
MARKET INSIGHT - INTERMODAL
With yields of up to 563%, the shares of Greek shipping companies listed on Wall Street are recorded. The Coronavirus pandemic has not significantl ...
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- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Planning Commission, India
- Australian Coal Association
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- GMR Energy Limited - India
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
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