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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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Thursday, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Australian Coal Association
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Indogreen Group - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- The Treasury - Australian Government
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Marubeni Corporation - India
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
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