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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, 23 November 15
NEGATIVE 2016 OUTLOOK FOR WESTERN EUROPEAN STEEL - SAYS FITCH RATINGS
COALspot.com: European steel in 2016 are both negative for the sector and for issuer ratings.
This reflects our expectation that import levels ...
Monday, 23 November 15
DRY BULK MARKET: NET FLEET GROWTH IS SLOWING DOWN, AS SHIP OWNERS ARE LOOKING FOR WAYS TO ALLEVIATING MARKET MELTDOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been in “meltdown” mode for a few weeks now, unable to find support and avoid the fall in historical lows. As s ...
Monday, 23 November 15
CS50 COAL INDEX CLOSED AT $40.27 PER TON; FELL 0.15% FROM LAST WEEK
COALspot.com: The 5700 GAR CS (i) coal index fell by US cents 3 per ton week over week on 20 November 2015. CS 57 (5700 GAR coal) index closed at U ...
Monday, 23 November 15
CFR SOUTH CHINA COAL SWAPS FALL FURTHER ON LOW DEMAND
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 6.75 (13.99%) per ton month over month.
A commodity swa ...
Sunday, 22 November 15
INDONESIA TO INDIA FREIGHT RATES TO REMAIN DULL NEXT WEEK
COALspot.com: The BDI was down to historical lows closing at 498 points which is down by almost 95.77 per cent compared to 11,800 points in 2008.
...
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- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Coalindo Energy - Indonesia
- Parliament of New Zealand
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- Bukit Baiduri Energy - Indonesia
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- White Energy Company Limited
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Indian Oil Corporation Limited
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Savvy Resources Ltd - HongKong
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
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