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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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Monday, 24 June 24
PHILIPPINES COAL SUPPLY ENOUGH UNTIL 2030 - PHILSTAR GLOBAL
The country’s existing coal-fired power plants are sufficient to ensure enough base load capacity in the next six years, Energy Secretary Rap ...
Friday, 14 June 24
NEXTDECADE, SAUDI ARAMCO SIGN 20-YEAR LNG SUPPLY DEAL - REUTERS
U.S. liquefied natural gas (LNG) provider NextDecade has signed a non-binding agreement with Saudi Aramco 2222.SE to supply 1.2 million tonnes per ...
Friday, 14 June 24
NEWBUILDING PRICES CLIMB 3% TO HIGHEST LEVEL IN 16 YEARS - NIELS RASMUSSEN
“Since the start of the year, newbuilding prices have risen 3% to their highest level since 2008. Compared to their most recent low in late 2 ...
Friday, 14 June 24
INDIA TARGETS HIGHER DOMESTIC COAL PRODUCTION, REDUCED IMPORTS: GOVT - REUTERS
India wants to reduce coal imports and increase domestic production, federal coal minister G. Kishan Reddy said on Thursday.
The cou ...
Thursday, 13 June 24
US LNG TO ASIA FOR POWER GENERATION EXPECTED TO CUT EMISSIONS VERSUS COAL - RYSTAD ENERGY
The value-chain emissions of liquified natural gas (LNG) are lower on average than for coal-fired power generation, even when the fuel is shipp ...
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- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- VISA Power Limited - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- The University of Queensland
- Independent Power Producers Association of India
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
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