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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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Thursday, 10 March 16
IT FEELS SAFE TO SAY THAT THE MARKET IS SLOWLY AND PAINFULLY REGAINING ITS BALANCE
With the BDI marking its third consecutive positive weekly closing, it feels safe to say that the market is regaining its balance; slowly and painf ...
Wednesday, 09 March 16
U.S. COAL EXPORTS DECLINED 24% (74 MMST) IN 2015; COAL PRODUCTION IS EXPECTED TO DECREASE BY 111 MMST IN 2016 - EIA
U.S. Coal Supply
EIA estimates that U.S. coal production for February 2016 was 54 million short tons (MMst), a 4 MMst (7%) decrease from the prev ...
Wednesday, 09 March 16
RI MAY HAVE TO IMPORT COAL FOR FUTURE POWER PLANTS: STUDY - THE JAKARTA POST
With coal prices continuing to decline, Indonesia will struggle to provide the coal needed to fire up its power stations in the near future, a stud ...
Tuesday, 08 March 16
INDONESIA HIKES COAL BENCHMARK PRICE FOR THE FIRST TIME IN 12 MONTHS
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further deep in February 2016, but up slightly in Mar ...
Tuesday, 08 March 16
THE DRY CARGO MARKET ENDURED ONE OF ITS MOST DIFFICULT YEARS IN 2015, EXPERIENCING LOWS NOT SEEN SINCE THE MID 1980S - CLARKSONS
Whilst shipping and offshore markets have seen some good opportunities during 2015, overall there have been unprecedented challenges, so we are ver ...
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Showing 2531 to 2535 news of total 6871 |
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- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Transport, Egypt
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Aditya Birla Group - India
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Planning Commission, India
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- PTC India Limited - India
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Mercator Lines Limited - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
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