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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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Tuesday, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
...
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- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- VISA Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
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