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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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Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Formosa Plastics Group - Taiwan
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Merrill Lynch Commodities Europe
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- CNBM International Corporation - China
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Australian Coal Association
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Economic Council, Georgia
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Marubeni Corporation - India
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- San Jose City I Power Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
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