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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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Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
Sunday, 24 January 16
PANAMAX MARKET WEAKENS ACROSS THE BOARD
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertiliser, fell ninetee ...
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- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Africa Commodities Group - South Africa
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- The University of Queensland
- Simpson Spence & Young - Indonesia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- Indian Energy Exchange, India
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Georgia Ports Authority, United States
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
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