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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, 29 January 21
OPEC+, COVID-19 AND ENERGY TRANSITION - 3 THEMES IMPACTING OIL MARKETS AND REFINING IN 2021 - WOOD MACKENZIE
Wood Mackenzie’s latest outlook report shows that the art of balancing oil markets and the refining sector in 2021 hinges upon three key them ...
Thursday, 28 January 21
STRONG CHINESE THERMAL COAL IMPORTS TO BENEFIT INDONESIAN MINERS IN THE NEAR TERM - FITCH RATINGS
China's thermal coal imports are likely to remain strong ahead of the Chinese New Year in mid-February on robust demand, high utilisation at do ...
Thursday, 28 January 21
WIND PROPULSION FOR DRY BULK CARRIERS - OLDENDORFF
Oldendorff Carriers (OC) has signed a Joint Development Project (JDP) with Anemoi Marine Technologies (Anemoi), Lloyd’s Register (LR) and Sha ...
Thursday, 28 January 21
BUMA PRICED A USD400 MILLION 7.75% 5-YEAR SENIOR NOTES
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama priced a USD400 million 5-year (non-callable 2-year)& ...
Wednesday, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
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- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Sakthi Sugars Limited - India
- The University of Queensland
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Australian Commodity Traders Exchange
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Marubeni Corporation - India
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petron Corporation, Philippines
- Economic Council, Georgia
- Siam City Cement - Thailand
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
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