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Wednesday, 24 February 16
THIRTEEN - NOT ALWAYS AN UNLUCKY NUMBER? - CLARKSONS
 Back in early 1999 the price of a 5 year old Panamax bulkcarrier dipped to $13.5m, and ever since analysts have hailed purchase decisions made at that time as some of the most lucrative shipping deals ever seen. Today, with the price back at $13m, perhaps it’s a good time to reflect on how successful investors were back in 1999 and whether there are similar opportunities once again.
What Was The Deal?
The graph shows for each year since 1990 the return that would have been generated by the purchase of a 5 year old Panamax bulkcarrier at the start of the year, the subsequent operation for ten years at the prevailing one year timecharter rate and then the sale of the unit at the end of that period as a 15 year old (for units purchased in 2007 and later, disposal at start 2016 was assumed). At the end of 1999 investors could pick up a 5 year old Panamax bulker for $14m. Trading that vessel at the start year one year timecharter rate for 10 years would have generated estimated earnings of $66.5m (after opex), and then as a 15 year old unit in 2009 the vessel could have been sold for $12.5m. That’s a small loss of $1.5m on the asset but still a total return of $65m, and an impressive internal rate of return (IRR) of 26%.
Playing Snap
A few years later, 5 year old Panamax bulkcarrier purchases did perhaps even better. Buying a 5 year old in 2002, once again at $14m, trading at the timecharter rate and selling as a 15 year old would have generated total returns of $73.2m and an IRR of 41%, whilst the equivalent project in 2003 would have generated $66.1m and an IRR of 44%. These vessels would have generated boom earnings earlier in the project period, subject to a heavier weighting in terms of the internal rate of return calculation.
Not Always A Good Hand
However, not all investors are so lucky. In this example, 5 year old ships purchased since 2008 (and sold this year, so admittedly with less time to hit upon a period of boom earnings) generated negative returns, and those purchased pre-1995 an average IRR of 7%. Buyers in 2008 would have lost a whopping $82.1m on the asset. Nevertheless, there was clearly a golden period; in the years 1998-2006 investors would have achieved an IRR ranging between 20% and 44%.
Unlucky (Or Lucky) 13?
So for those who have had the stomach to buy in at difficult times, there have been more than ample rewards. Today the price of a 5 year old Panamax is back at $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Friday, 11 March 16
ADANI GLOBAL BAGS 0.26 MILLION TONS OF COAL CONTRACT FROM LANKA COAL COMPANY
COALspot.com: Lanka Coal Company (Private) Limited, Sri Lanka has awarded 260,000 +/- 10% tons of Power plant 6300 GAR calorific value coal to Adan ...
Friday, 11 March 16
US WEEKLY COAL PRODUCTION DOWN BY 0.5 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.6 million shor ...
Friday, 11 March 16
FORTESCUE'S MOU WITH VALE COULD STRENGTHEN ITS BUSINESS PROFILE - FITCH
COALspot.com: Fitch Ratings says that Australia-based Fortescue Metals Group Limited's (BB+/Negative) memorandum of understanding (MOU) with Br ...
Thursday, 10 March 16
CHINA'S NEW POLICY PLAN COULD BE POSITIVE FOR SHIPPING, BUT TARGETS SEEM RATHER AMBITIOUS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China set out its new policy plan during the course of the past weekend, but it seems to have set some very ambitious goals, which could be difficu ...
Thursday, 10 March 16
U.S. COAL EXPORTS DECLINED 23% IN 2015, AS COAL IMPORTS REMAINED STEADY
COALspot.com: The United States remains a net exporter of coal, exporting 74.0 million short tons (MMst) and importing 11 MMst in 2015.
Accord ...
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- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Parliament of New Zealand
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Sinarmas Energy and Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Economic Council, Georgia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- PTC India Limited - India
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- The University of Queensland
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
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