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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, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Mercator Lines Limited - India
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Indian Energy Exchange, India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Tamil Nadu electricity Board
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Energy Link Ltd, New Zealand
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Heidelberg Cement - Germany
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
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