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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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Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...
Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
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- Bhatia International Limited - India
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Bayan Resources Tbk. - Indonesia
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- Orica Australia Pty. Ltd.
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Jaiprakash Power Ventures ltd
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Altura Mining Limited, Indonesia
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- ASAPP Information Group - India
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- White Energy Company Limited
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
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