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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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Wednesday, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
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- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Planning Commission, India
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- GMR Energy Limited - India
- Minerals Council of Australia
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Salva Resources Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
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