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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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Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
Saturday, 23 January 21
GOVT PLANNING TO OPEN UP COAL MARKETING TO STREAMLINE PROCESS - THE INDIAN EXPRESS
The government is considering opening up coal marketing, Coal Secretary Anil Kumar Jain said on Thursday. Currently, production by Coal India is al ...
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- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- White Energy Company Limited
- Commonwealth Bank - Australia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Parry Sugars Refinery, India
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Planning Commission, India
- Ministry of Finance - Indonesia
- SMG Consultants - Indonesia
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