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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 $40/bbl, creating an opportunity for arbitrage by holding oil in ships, in anticipation of a price increase. Additionally, of course, bulkers have suffered from an absence of demand growth this year.
The Usual Suspects?
So there you have it. The tanker boom has gone on longer than many might have anticipated and tanker earnings are outperforming their long-run relationship with bulker earnings. But a “fundamental” surplus remains and investors might be right to be cautious. Scrapping has almost stopped, ordering has picked up and supply growth is set to increase. So, enjoy it while you can, and remember that it’s partly a game of catch up.
Have a nice day.
Source: Clarksons | Hellenic Shipping News
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Monday, 30 November 15
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
ASSOCARBONI is in favour of an international mechanism to provide financial support to countries building high efficiency low emission coal plants. ...
Monday, 30 November 15
CS 5000 GAR COAL INDEX FIRM D-O-D; WEAK W-O-W
COALspot.com: The 5000 GAR CS (i) coal index up slightly day over day.
According to the system generated index, the CS 50 (5000 GAR coal) was ...
Monday, 30 November 15
CFR SOUTH CHINA COAL SWAPS REMAINED UNCHANGED FROM LAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.50 (9.78%) per ton month over month.
A commodity swap ...
Sunday, 29 November 15
CAPE INDEX SURGES 383 POINTS WEEK OVER WEEK, BOOSTS BALTIC DRY INDEX
COALspot.com: The Baltic Dry Index, a measure of shipping rates, fell to 498 points on 20 November and touched a 30-year low, but on 27 November th ...
Friday, 27 November 15
INDONESIA COAL SWAPS: WEEK ENDING 20 NOVEMBER CLOSED HIGHER COMPARED TO THE PREVIOUS WEEK
COALspot.com: Indonesian coal swaps for delivery Q1 2016 declined month on month and up on week over week. Coal prices seen slight improvements thi ...
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- ASAPP Information Group - India
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- International Coal Ventures Pvt Ltd - India
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- Minerals Council of Australia
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- MS Steel International - UAE
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- Port Waratah Coal Services - Australia
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- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
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- Kohat Cement Company Ltd. - Pakistan
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- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
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- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
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- Petrochimia International Co. Ltd.- Taiwan
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- White Energy Company Limited
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- Eastern Coal Council - USA
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- Independent Power Producers Association of India
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- Standard Chartered Bank - UAE
- Planning Commission, India
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- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
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- Ministry of Transport, Egypt
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- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
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- Dalmia Cement Bharat India
- Riau Bara Harum - Indonesia
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- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
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- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
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- Leighton Contractors Pty Ltd - Australia
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