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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, 22 March 24
INDONESIA APPROVES 922.14 MLN T COAL PRODUCTION QUOTA FOR 2024, ABOVE TARGET - REUTERS
Indonesia has approved coal production quotas totalling 922.14 million metric tons for 2024, Bambang Suswantono, a senior official at the mining mi ...
Friday, 22 March 24
CHINA COAL INDUSTRY GROUP EXPECTS OUTPUT GROWTH TO SLOW IN 2024 - REUTERS
China’s coal output is expected to increase 36 million metric tons, or 0.8%, to about 4.7 billion tonnes in 2024, a Chinese coal industry gro ...
Monday, 18 March 24
THREE KEY TAKEAWAYS FROM OUR EUROPE GAS MARKETS SHORT-TERM OUTLOOK Q1 2024 - WOOD MACKENZIE
European gas prices are currently back to pre-crisis levels, but with a complex series of factors affecting future supply and demand, are they set ...
Wednesday, 06 March 24
INDONESIA AIMS TO FINISH MINING OUTPUT QUOTAS APPROVAL BY END-MARCH, OFFICIAL SAYS - REUTERS
Indonesia’s has approved the mining production quotarequests from more than 120mineral companies and aims to complete the approval process th ...
Monday, 04 March 24
IS YOUR GUARANTEE A GUARANTEE? NOTE TO SHIPOWNERS - GARD
KNOWLEDGE TO ELEVATE
The law of guarantees is not always obvious or easy to understand without proper guidance. This article clarifies the dif ...
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- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Carbofer General Trading SA - India
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Heidelberg Cement - Germany
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
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