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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- PNOC Exploration Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
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