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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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Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
Thursday, 28 January 16
WHAT ARE THE PROSPECTS FOR COAL IN LIGHT OF THE PARIS CLIMATE AGREEMENT? - GERMAN COAL IMPORTERS ASSOCIATION
This depends – says the VDKi – to a very great extent on who you want to believe more, the United Nations or the International Energy A ...
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- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Mintek Dendrill Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Makarim & Taira - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Xindia Steels Limited - India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Medco Energi Mining Internasional
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sojitz Corporation - Japan
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
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