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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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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Grasim Industreis Ltd - India
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- PTC India Limited - India
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Independent Power Producers Association of India
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- GMR Energy Limited - India
- Karaikal Port Pvt Ltd - India
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- The University of Queensland
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Anglo American - United Kingdom
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
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