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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, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Sindya Power Generating Company Private Ltd
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Agrawal Coal Company - India
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- SMC Global Power, Philippines
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
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