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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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Friday, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- White Energy Company Limited
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Ceylon Electricity Board - Sri Lanka
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Posco Energy - South Korea
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
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