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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Orica Mining Services - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Minerals Council of Australia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Planning Commission, India
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
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