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Wednesday, 13 October 21
MARKET INSIGHT - INTERMODAL
 Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to see that dry bulk Q4 high seasonality has returned after at least 3 years of underperformance, driving also the Q4’21 and Q1’22 FFA curve to multi year highs. Back in May, we had explained why we thought a higher Cape market peak during 2H2021 was in the cards, with fundamentals recently being boosted by accelerating restocking demand, near record high Capesize congestion at Pacific discharge ports and a global energy supply deficit leading to scrambling for coal supplies globally. In the present insight, we are briefly addressing some of the market points that are likely to impact the direction of freight rates looking forward.
Iron Ore restocking to be in full swing during Q4 regardless of China’s crude steel production contraction. Q1 2022 Risks: Slow-down in construction during winter and in view of China’s Winter Olympics, exacerbated by high energy costs. China’s property developers slowing down land purchases amid deleveraging efforts
The primary force behind the crude steel production decline in the short term is the severe coking coal /coke and power shortage forcing crude steel production to adjust downwards. Cuts are expected to intensify from November 15th to the end of the year as a 1st stage and then through March 2022, as per government’s pledges. Even if most of the targeted steel production cuts materializes through Sep-Dec 2021, probabilities that they will immediately translate into a decline in iron ore requirements are low, as 1) the iron ore restocking process is directly connected to iron ore seaborne supplies which are the strongest during Q4 – the decline in iron ore prices from multi year highs in May 2021 is currently facilitating the restocking process supporting the purchasing power of steel mills – steel mills margins remain strong due to the diverging trends in steel and iron ore prices, despite the surge in coking coal costs 2) Skyrocketing energy costs are likely to negatively impact more the scrap related steel production process during the quarter (Electric Arc Furnaces are higher energy consumers) vs Blast Furnaces (more iron ore requirements). When iron ore restocking will be completed, this will be a negative signal for new iron ore procurement, likely during the 1H2022. On this note, iron ore inventories at China’s ports have increased by +9.2 million tons since the end of Q2 and there is more room for them to inflate further by the end of the year.
Inflationary pressures on the energy complex supportive to dry bulk freight rates in the short-term. Q1 2022 Risks: La Nina conditions might bring a colder winter supporting coal consumption but also wetter conditions in Australia from December to April increasing risks of exports disruptions
Natural gas prices have raised the price ceiling higher for the whole energy complex and while international coal prices have hit record high levels, the price gap with natural gas continues to incentivize substitution in power generation globally and Europe particularly. The competition for securing coal supplies in both basins has inflated $ per ton freight across major coal routes to 12-year highs – which we think is sustainable - as the % of freight in coal prices is still low (approx. 13%) compared to 2009-2010 (approx. 22%).
China’s domestic coal output is expected to increase in the next months on a series of government measures to boost supplies, although the incremental volumes during Q4 are not expected to be sufficient to cover the supply deficit. The continuous decline in coal inventories at major power plants and expectations for a cold winter continue to indicate increasing thermal coal import needs for restocking in the winter heating season. Demand for coal imports is further enhanced by India’s urgency to restock as inventories at power plants have dropped to the lowest level since 2017 at 7.3 million tons but at a record low in terms of days of consumption i.e. just 4 days, as per latest data from India’s Central Electricity Authority.
High bunker prices are supportive to dry bulk freight rates as we had discussed in our May insight, likely to exacerbate fleet inefficiencies across the basins, with the Atlantic expected to benefit more in the short term. Talks about demand destruction from high oil prices will be substantiated when manufacturers’ profitability and consumers’ purchasing power starts to be negatively impacted with costs curves rising upwards. This is likely to take place at higher prices than the current $80/bbl in our view and those would have to be sustained during the quarter.
By Tamara Apostolou, Research Director
Compiled by:
Intermodal Research & Valuations
Analysts:
Yiannis Parganas
Tamara Apostolou
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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- Kumho Petrochemical, South Korea
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- New Zealand Coal & Carbon
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Neyveli Lignite Corporation Ltd, - India
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Videocon Industries ltd - India
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Tata Chemicals Ltd - India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Economic Council, Georgia
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
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