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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, 19 February 16
U.S. WEEKLY COAL PRODUCTION ROSE 2.6% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.2 million shor ...
Thursday, 18 February 16
INDIA NEEDS INTERNATIONAL SUPPORT ON HIGH EFFICIENCY COAL - WORLD COAL ASSOCIATION
Speaking at a conference in New Delhi today, World Coal Association Chief Executive Benjamin Sporton said the critical role of coal in driving econ ...
Thursday, 18 February 16
CHINA COAL SECTOR - 2015 RESULTS BLEAK, 2016 UNLIKELY TO BE ANY BETTER - FITCH
COALspot.com: China Coal Sector’s Financial Woes to Worsen in 2016.
Fitch Ratings says that the 2015 full-year result previews issued by ...
Thursday, 18 February 16
PANAMAX RATES OUT OF ECSA WERE STILL GAINING A PREMIUM OVER THE REST OF THE MARKET - INTERMODAL
The BDI moved further down last week, fact that hardly took anyone by surprise as the lunar year holidays in Asia on top of the already depre ...
Wednesday, 17 February 16
TAP ON OPPORTUNITIES IN GROWING ELECTRICITY DEMAND AND NEW COAL POWER PROJECT DEVELOPMENTS IN THE PHILIPPINES - IBC
Tap on Opportunities in Growing Electricity Demand and New Coal Power Project Developments in the Philippines
Coal Power Generation 2016
19- ...
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- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Siam City Cement - Thailand
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- VISA Power Limited - India
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Kalimantan Lumbung Energi - Indonesia
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
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