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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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Thursday, 02 March 23
DRY BULK MARKET: THE WAY CHINA GOES, SO GOES THE MARKET - BIMCO
We expect demand growth within the 1.5-2.5% range in 2023, driven by China’s economic recovery. Improvements in consumer sentiment should hel ...
Thursday, 02 March 23
INDIA, CHINA DEMAND BOOST LOW-RANK THERMAL COAL PRICES IN ASIA - RUSSELL, REUTERS
Signs of stronger import demand from India have arrested the decline in price of the thermal coal grades most commonly sought by the world’s ...
Thursday, 02 March 23
INDIA CHEERS THE RETURN OF ‘KING COAL’ AS INDUSTRY SEES BUOYANT FUTURE - REUTERS
India’s coal industry celebrated the return of its major conference after a three-year pandemic hiatus by presenting a bullish view of demand ...
Wednesday, 01 March 23
GEO CONNECT ASIA RETURNS IN MARCH TO ACCELERATE THE REGION’S GEOSPATIAL AND LOCATION INTELLIGENCE CAPABILITIES
Press Release: The third edition of GCA will be held in conjunction with Digital Construction Asia and the inaugural Drones Asia – an event d ...
Wednesday, 01 March 23
THE DECLINE IN THE COAL PRICE SINCE THE BEGINNING OF THE YEAR HAS BEEN SIGNIFICANT - INTERMODAL
Last week, the front-month API2 future rose by 3.5%, but since the beginning of the year the future has fallen by 39% to $136.65/t, while the Newca ...
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- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Wilmar Investment Holdings
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- White Energy Company Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Formosa Plastics Group - Taiwan
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Parry Sugars Refinery, India
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Mercuria Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Australian Coal Association
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Anglo American - United Kingdom
- Aditya Birla Group - India
- GMR Energy Limited - India
- Posco Energy - South Korea
- Star Paper Mills Limited - India
- Tata Chemicals Ltd - India
- PTC India Limited - India
- PowerSource Philippines DevCo
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Binh Thuan Hamico - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
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