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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, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Asam (Persero) Tbk - Indonesia
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Alfred C Toepfer International GmbH - Germany
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- PTC India Limited - India
- Australian Coal Association
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Anglo American - United Kingdom
- Uttam Galva Steels Limited - India
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Planning Commission, India
- Indonesian Coal Mining Association
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