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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Planning Commission, India
- ASAPP Information Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- White Energy Company Limited
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Star Paper Mills Limited - India
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- MS Steel International - UAE
- Agrawal Coal Company - India
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Australian Coal Association
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
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