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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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Wednesday, 10 February 21
MARKET INSIGHT - INTERMODAL
We have just entered February, Chinese New Year holidays are about to start and the SnP market for bulkers is so hot as every seller would dream of ...
Tuesday, 09 February 21
SWITCHING COAL PLANTS TO PLN'S BIOMASS COFIRING PLAN IS NO MAGIC BULLET - IEEFA
Implementation risks for Indonesia PLN's switch from coal to biomass cofiring
PLN’s biomass cofiring plan will require not ...
Friday, 05 February 21
THE INDONESIA COAL PRICE REFERENCE FOR FEBRUARY 2021 SETTLES AT US$ 87.79 PER TON FOB VESSEL
COALspot.com: The Indonesia coal price reference for February 2021 settles at US$ 87.79 per ton FOB vessel. The February reference price is the hig ...
Thursday, 04 February 21
WHY BANGLADESH SHOULDN’T COUNT ON A FOSSIL FUEL FUTURE - IEEFA
Around US$50 billion of LNG projects in Asia at risk of cancellation
Two astonishing figures have circulated in the Asian energy sector in the ...
Wednesday, 03 February 21
INDONESIA TO EXPORT 395 MILLION TONS OF COAL IN 2021 - ESDM
Data from the Ministry of Energy and Mineral Resources shows that, Indonesia is planning to produce 550 million Ton of coal in 2021 and as of t ...
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- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- White Energy Company Limited
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Australian Coal Association
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- The University of Queensland
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- IHS Mccloskey Coal Group - USA
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
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