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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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Tuesday, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
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- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- White Energy Company Limited
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
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