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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, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- PTC India Limited - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Grasim Industreis Ltd - India
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- MS Steel International - UAE
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- VISA Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
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