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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, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
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- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Bharathi Cement Corporation - India
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Manunggal Multi Energi - Indonesia
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Deloitte Consulting - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Cement Manufacturers Association - India
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- The University of Queensland
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
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