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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Marubeni Corporation - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Australian Coal Association
- Attock Cement Pakistan Limited
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- The University of Queensland
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- SMG Consultants - Indonesia
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Planning Commission, India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Wood Mackenzie - Singapore
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
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