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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Indonesian Coal Mining Association
- Planning Commission, India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- India Bulls Power Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
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