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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, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Antam Resourcindo - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- White Energy Company Limited
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Planning Commission, India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Java Power - Indonesia
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- SN Aboitiz Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Bukit Asam (Persero) Tbk - Indonesia
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