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Tuesday, 01 December 15
TANKERS VERSUS BULKERS - JUST PLAYING CATCH UP? - CLARKSONS
 It’s now more than a year since the tanker market took off. In mid-2014 tanker earnings picked up and since then have been in the $30-$40,000/day range. But the market remains nervous. This tanker pick-up coincided with a slump in dry bulk earnings, which is interesting because on paper bulkers and tankers both seem to have surplus capacity. So why are tankers doing so much better than bulkers?
Long-Term Premium
On an “all sizes average” basis tanker earnings generally exceed bulker earnings (the tanker “basket” contains a greater share of larger ships). For example, between 1990 and 2015 to date tanker earnings averaged $24,996/day, whilst bulkers earned $13,933/day. That gives tankers a 79% premium over bulkers. During the seven years since the Credit Crisis, the premium has remained. Tankers have earned $18,281/day, compared to bulkers’ $12,427/day, a 47% premium. So the “premium” relationship held, even during a period of deep recession.
Earnings Distribution
However, during the period of recession tanker earnings have swung from below to above “average premium levels”. To illustrate this point we have estimated what tanker earnings “should have been” over the last seven years if they had followed the “average premium” relationship with bulker earnings over the full period back to 1990. This relationship was estimated using a regression equation as a “rule of thumb”, using monthly data for the period 1990 to 2015, and then used to estimate tanker earnings since 2009 from bulker earnings, shown by the red line on the graph.
For the first five years tankers underperformed compared to the long-term “average premium” versus bulkers, with the blue line, showing actual earnings, below the red line. But in 2014 they started to exceed the expected premium as bulker earnings dropped and tanker earnings increased. Currently tanker earnings offer a significant “bonus” above the estimated “norm”, at levels about six times higher than bulker earnings.
More Than One Answer
So what’s going on? The first answer is that tankers are playing “catch up” for the bad run early in the recession. But there are other answers to the question. One is that in 2015 oil trade has grown much faster than expected, increasing by 4% compared with only 2% expected earlier in the year. Another is the oil price collapse from over $100/bbl to close to $40/bbl, creating an opportunity for arbitrage by holding oil in ships, in anticipation of a price increase. Additionally, of course, bulkers have suffered from an absence of demand growth this year.
The Usual Suspects?
So there you have it. The tanker boom has gone on longer than many might have anticipated and tanker earnings are outperforming their long-run relationship with bulker earnings. But a “fundamental” surplus remains and investors might be right to be cautious. Scrapping has almost stopped, ordering has picked up and supply growth is set to increase. So, enjoy it while you can, and remember that it’s partly a game of catch up.
Have a nice day.
Source: Clarksons | Hellenic Shipping News
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Monday, 14 December 15
CFR SOUTH CHINA COAL SWAP IS STILL SLIDING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 0.93(2.18%) per ton month over month.
A commodity swap ...
Sunday, 13 December 15
THE LOW VESSEL DEMANDS PUSHED DOWN BALTIC DRY INDEX FURTHER DOWN
COALspot.com: The low vessel demand across nearly all vessel sizes pushed the Baltic Exchange’s main sea freight index further down in this F ...
Sunday, 13 December 15
DRY BULK RATES KEEP ON FALLING AS LOW VESSEL DEMAND IS STILL THE NORM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market nowadays is in an endless downward spiral, which as it turns out is unable to recover, at least as long as the current balance ...
Friday, 11 December 15
US COAL PRODUCTION UP 7.7% IN WEEK ENDED DECEMBER 5, 2015
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 10 December 15
LIENING CARGO - WHICH LIEN CLAUSE APPLIES TO THE BILL OF LADING? : WIKBORG REIN | HELLENIC SHIPPING NEWS
KNOWLEDGE TO ELEVATE
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether ...
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- OPG Power Generation Pvt Ltd - India
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- Australian Coal Association
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- Ministry of Mines - Canada
- Alfred C Toepfer International GmbH - Germany
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- AsiaOL BioFuels Corp., Philippines
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- Anglo American - United Kingdom
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- Neyveli Lignite Corporation Ltd, - India
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- Jorong Barutama Greston.PT - Indonesia
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- Sarangani Energy Corporation, Philippines
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- Energy Link Ltd, New Zealand
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- The University of Queensland
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- Samtan Co., Ltd - South Korea
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- Directorate General of MIneral and Coal - Indonesia
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- Karbindo Abesyapradhi - Indoneisa
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- San Jose City I Power Corp, Philippines
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
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- New Zealand Coal & Carbon
- Parliament of New Zealand
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- Metalloyd Limited - United Kingdom
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- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
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- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
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- PetroVietnam Power Coal Import and Supply Company
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- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
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- PTC India Limited - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
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- Star Paper Mills Limited - India
- Wilmar Investment Holdings
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- Planning Commission, India
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- PowerSource Philippines DevCo
- Eastern Energy - Thailand
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- Semirara Mining Corp, Philippines
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