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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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- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
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- ASAPP Information Group - India
- Parliament of New Zealand
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- Indian Oil Corporation Limited
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- Indonesian Coal Mining Association
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- ICICI Bank Limited - India
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- Eastern Coal Council - USA
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- Ministry of Finance - Indonesia
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- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
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- Formosa Plastics Group - Taiwan
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- SMC Global Power, Philippines
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- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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- Larsen & Toubro Limited - India
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- Economic Council, Georgia
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- Australian Commodity Traders Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
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