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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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Wednesday, 07 December 22
MARKET INSIGHT - INTERMODAL
China’s coal imports from January to October were 230.1m mt, a decrease of around 10.7% y-o-y (2021 totalled 323.2m mt). The question is if t ...
Wednesday, 07 December 22
INDIA'S STEEL MINISTRY SEEKS IMPORT TAX WAIVER FOR COKING COAL - SOURCES REUTERS REPORTED
India’s steel ministry has asked the finance ministry for a waiver of import tax on coking coal among a slew of raw materials, as it scramble ...
Tuesday, 06 December 22
INDIA'S COAL PRODUCTION RISES 17% IN APR-NOV PERIOD - PTI
The country’s coal production increased 17 per cent to 524.20 million tonnes in the April-November period of the ongoing fiscal.
...
Tuesday, 06 December 22
INDONESIA AIMS TO STARTS COLLECTING COAL LEVY IN Q1 2023 - MINISTER, REUTERS REPORTED
Indonesia aims to establish a coal fund agency and start collecting a coal levy in the first quarter next year, to help ensure supply security for ...
Saturday, 03 December 22
COMPLEX RUSSIAN PRICE CAP MAKES MARITIME VISIBILITY A MUST - WINDWARD
Many commentators and analysts are speculating about the potential impact the Russian seaborne oil price cap will have on organizations and entitie ...
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- Mjunction Services Limited - India
- Bulk Trading Sa - Switzerland
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Latin American Coal - Colombia
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- Australian Coal Association
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- CNBM International Corporation - China
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- VISA Power Limited - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
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