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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, 26 January 23
AUSTRALIA'S CORONADO GLOBAL SEES COAL PRICES RISING ON RESUMING CHINA IMPORTS - REUTERS
Australia’s Coronado Global Resources said on Tuesday resuming metallurgical coal imports to China would likely push sea-borne coal prices hi ...
Monday, 23 January 23
CHINA'S MAJOR COAL-PRODUCING PROVINCE ACCELERATES DIGITAL TRANSFORMATION - XINHUA
At Chindata Group’s big-data industrial park in Lingqiu County of Datong City, hundreds of thousands of servers are running round-the-clock t ...
Monday, 23 January 23
CHINA'S COAL-RICH PROVINCE SEES COAL PRODUCTION INCREASE IN 2022 - XINHUA
North China’s coal-rich province of Shanxi saw its coal production hit 1.31 billion tonnes in 2022, up 8.7 percent year on year, local author ...
Wednesday, 18 January 23
MARKET INSIGHT - INTERMODAL
From Feb 5, another price cap will be introduced to Russian fuels and oil products, adding to the one for crude oil, already in place from Dec. 3. ...
Tuesday, 17 January 23
FRAUD IS THE BIGGEST THREAT TO CARGO LOSSES - TT CLUB
The almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits to find opportunities within ...
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- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- The University of Queensland
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- Star Paper Mills Limited - India
- PTC India Limited - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
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