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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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Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Chamber of Mines of South Africa
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Malabar Cements Ltd - India
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- SN Aboitiz Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Planning Commission, India
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- PTC India Limited - India
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
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