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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, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- PTC India Limited - India
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- ASAPP Information Group - India
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Trasteel International SA, Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Makarim & Taira - Indonesia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
- The University of Queensland
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Parliament of New Zealand
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
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