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