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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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Thursday, 03 December 15
DRY BULK: THERMAL COAL LOWER USAGE UNDER A POTENTIAL NEW CLIMATE DEAL WILL ADVERSELY IMPACT THE MARKET'S RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
In direct contrast to the tanker market, the dry bulk one has seen demand for key commodities, such a coal, dwindling down over the course of the p ...
Thursday, 03 December 15
PANAMAX BUSINESS REMAINED UNDER PRESSURE LAST WEEK
COALspot.com: Following the new record lows the Dry Bulk market witnessed the week prior, the BDI took a much needed breath during the past days.
...
Wednesday, 02 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SLIGHTLY UP FOR THE THIRD STRAIGHT WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up month over month and fell week over week.
The Q1’ 2016 &nbs ...
Wednesday, 02 December 15
MARKET INSIGHT - VASSILIS LOGOTHETIS
Boom and bust cycles in commodity prices are not something rare, yet they have important implications both for the world economy in general and for ...
Tuesday, 01 December 15
FOB NEWCASTLE COAL SWAP UP THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.75 per ton (9.26%) month over month to US$ 36.75 per ton. The swap ...
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- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Parliament of New Zealand
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Uttam Galva Steels Limited - India
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- MS Steel International - UAE
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
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