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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, 03 February 21
MARKET INSIGHT - INTERMODAL
"2020 the year from hell for the entire world, had everything for shipowners. The introduction of the sulphur cap and VLSFO, a Pandemic outbre ...
Tuesday, 02 February 21
WILL THE ELECTRONIC B/L BE FULLY IMPLEMENTED? FIVE POINTS TO CONSIDER - MOL
KNOWLEDGE TO ELEVATE
The trend towards digitization of Bills of Lading (B/L) has begun to attract attention in the trade and shipping industrie ...
Monday, 01 February 21
A 56,000-DWT OPEN MANILA WAS FIXED FOR A TRIP VIA INDONESIA REDELIVERY CHINA AT $11,500 - THE BALTIC BRIEFING
Capesize
The Capesize routes endured a week of slippage on rates, bringing the market back down to levels seen at the beginning of the month. D ...
Monday, 01 February 21
PAKISTAN: COAL DEMAND EXPECTED TO SPIKE IN 2021 - DAWN
Coal demand is expected to remain upbeat in 2021 as more coal-fired and captive power plants are coming up in the current year.
Acco ...
Friday, 29 January 21
COAL EXPORTS FROM AUSTRALIA TO MAINLAND CHINA DECLINED BY -22.2% Y-O-Y IN 2020 - BANCHERO COSTA
In the 12 months of 2020, global seaborne coal trade declined by as much as -12.7% year-on-year, according to vessel tracking data from Refinitiv, ...
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- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Georgia Ports Authority, United States
- Gujarat Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Minerals Council of Australia
- White Energy Company Limited
- ASAPP Information Group - India
- Eastern Energy - Thailand
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- VISA Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Thai Mozambique Logistica
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
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