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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, 05 October 21
CAPESIZE MARKET WAS IN A STEEP CLIMB FOR MOST OF THIS WEEK - BALTIC EXCHANGE
Capesize
The Capesize market was in a steep climb for most of this week as it reached a pinnacle of $74,786 Wednesday before stalling, regather ...
Wednesday, 29 September 21
THE WRITING IS ON THE WALL: AUSTRALIA’S COAL ERA IS OVER - YAHOO!FINANCE
As the fringe of Australian politics strives to pump up the coal industry, facts show that coal production has started its long run decline.
&n ...
Wednesday, 29 September 21
SURGING COAL PRICES SPLIT ASIAN BUYERS INTO RICH AND POOR - REUTERS
As seaborne coal in Asia trades at, or near, record highs, there are early signs of demand destruction, especially among price-sensitive buyers suc ...
Wednesday, 29 September 21
MARKET INSIGHT - INTERMODAL
Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to the ...
Tuesday, 28 September 21
THE MAIDEN EDITION OF DIVE TECHNOLOGY SUMMIT 2021 CONCLUDES SUCCESSFULLY
Press Release: DIVE TECHNOLOGY SUMMIT 2021, a one-day conference on the recent technological advancements in the Industrial Diving industry conclud ...
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- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Jaiprakash Power Ventures ltd
- Metalloyd Limited - United Kingdom
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Grasim Industreis Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- IEA Clean Coal Centre - UK
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Romanian Commodities Exchange
- Central Electricity Authority - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Sakthi Sugars Limited - India
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Wilmar Investment Holdings
- Kartika Selabumi Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Parliament of New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
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