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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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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Bharathi Cement Corporation - India
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- PTC India Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
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