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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, 18 March 23
HEDGE TO OFFSET LNG VOLATILITY, TRADERS TOLD - BALTIC EXCHANGE
A shift in imports from Asia to Europe led to significant volatility in liquefied natural gas shipping last year, prompting industry experts to urg ...
Friday, 17 March 23
INDONESIAN COAL PRICE REFERENCE UP AROUND 2.17% IN MARCH 2023
COALspot.com: Indonesian Coal Price Reference up around 2.17% in March 2023.
According to the new HBA regulation No. 41.K/MB.0 ...
Saturday, 11 March 23
MARKET INSIGHT - INTERMODAL
Uncertainty over the recovery of Chinese demand, demand destruction in Europe, as well as weather conditions will pivot the LNG market this summer. ...
Wednesday, 08 March 23
INDONESIAN COAL REFERENCE PRICE FORMULA HAS OFFICIALLY CHANGED
Indonesian Minister of Energy and Mineral Resources has officially changed the guideline for determining the benchmark price for the sale of coal c ...
Thursday, 02 March 23
INDIA'S SEABORNE CRUDE OIL IMPORTS IN 2022 INCREASED BY 11.5% YOY - BANCHERO COSTA
2022 has turned out to be a very positive year for crude oil trade, despite the surging oil prices and risks of economic recession, Banchero Costa ...
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- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Leighton Contractors Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Generating Authority of Thailand
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Essar Steel Hazira Ltd - India
- Interocean Group of Companies - India
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Star Paper Mills Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Economic Council, Georgia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
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