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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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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Planning Commission, India
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- Latin American Coal - Colombia
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Parliament of New Zealand
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