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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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Sunday, 22 November 15
INDIA COULD PROVIDE SILVER LINING FOR SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The rise of India as a global player in the shipping market could be just a couple of years away, as the country has the potential to become a seco ...
Friday, 20 November 15
U.S. COAL PRODUCTION FOR THE WEEK ENDING NOVEMBER '14; NO CHANGE FROM LAST WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.5 million shor ...
Friday, 20 November 15
NO IMPROVEMENT SEEN IN NEAR-TERM COAL DEMAND; SWAPS CLOSE LOWER
COALspot.com: Indonesian coal swap for delivery Q1 2016 declined month on month and flat on week over week. Price of coal seen no improvements this ...
Friday, 20 November 15
CHANGING CRUDE SUPPLY TRENDS MAY HELP EUROPEAN REFINERS - FITCH RATINGS
COALspot.com: Changes in global oil supply trends, including high Russian production, the expected renewal of Iranian heavy crude exports and the p ...
Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the nex ...
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- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Planning Commission, India
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Anglo American - United Kingdom
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- White Energy Company Limited
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Africa Commodities Group - South Africa
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Ministry of Finance - Indonesia
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Wood Mackenzie - Singapore
- Energy Link Ltd, New Zealand
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Rashtriya Ispat Nigam Limited - India
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
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