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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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Sunday, 08 January 23
ELEVATED COAL PRICE A DRAG ON MARGINS OF DOMESTIC BASE METAL PLAYERS: ICRA
The increased price of coal continue to be a drag on the margin of domestic base metal players with no immediate relief in sight, rating agency ICR ...
Monday, 02 January 23
CHINA’S COAL CONSUMPTION TO PEAK BY 2035: REPORT - REUTERS
China’s primary energy consumption is likely to peak at nearly 6.03 billion tonnes of standard coal between 2030 and 2035, refining giant Chi ...
Thursday, 29 December 22
INDIA'S COAL DEMAND LIKELY TO PEAK BETWEEN 2030-2035: MINISTER - ANI
The demand for coal in India will continue and is likely to peak between 2030-2035, Union Minister of Coal, Mines, and Parliamentary Affairs Pralha ...
Thursday, 29 December 22
RIO TINTO AND PARTNERS COULD RECEIVE AS MUCH AS $450M IN GOVERNMENT COMPENSATION FOR COAL PRICE CAP - THE GUARDIAN
Compensation payments for the Gladstone power plant remain the sticking point in the federal government’s coal price cap compensation negotia ...
Wednesday, 28 December 22
MARKET INSIGHT - INTERMODAL
The United Nations Conference on Trade and Development (UNCTAD) published a Global Trade Update on December 13th highlighting that global trade wou ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- The University of Queensland
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Mjunction Services Limited - India
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
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