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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, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
Wednesday, 10 February 16
OWNERS APPEAR WILLING TO DISPOSE OF TONNAGE THE SOONEST IT HITS THE 10 YEAR MARK - TIMOS PAPADIMITRIOU
COALspot.com: The last two months of 2015 made a case for traditional shipowners to invest in the dry bulk sector, doing so though based purely on ...
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- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- PTC India Limited - India
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Larsen & Toubro Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Posco Energy - South Korea
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Ambuja Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Attock Cement Pakistan Limited
- Essar Steel Hazira Ltd - India
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Planning Commission, India
- London Commodity Brokers - England
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Africa Commodities Group - South Africa
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