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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, 19 January 16
HAPPY NEW YEAR, COAL PRODUCERS! OR MAYBE NOT - ANDY ROBERTS
To coal producers, 2015 must have seemed far longer than 365 days. From their perspective, as bad as markets were at the beginning of the year, and ...
Tuesday, 19 January 16
COALTRANS ASIA IS RETURNING TO BALI
22nd Coaltrans Asia
Coaltrans Asia is returning to Bali to bring together over 1000 industry decision makers and thought leaders for three day ...
Monday, 18 January 16
INDONESIAN 5700 GAR COAL INDEX ROSE 0.60% WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline slightly week over week to averaging $39.93 per ton on this past Friday, acc ...
Monday, 18 January 16
BALTIC DRY SHIPPING INDEX DROPS TO 373 POINTS; DECLINE 13% WEEK OVER WEEK
COALspot.com: The freight market dropped this week as the BDI declined further 13 percent to 373 points week over week. The Cape index ...
Monday, 18 January 16
Q1'16 CFR SOUTH CHINA COAL SWAP CLOSED AT $ 42.50 PER TON; UP 1% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.43 (1.02%) per ton month over month.
A commodity swap is ...
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- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Electricity Authority, New Zealand
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Interocean Group of Companies - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Eastern Coal Council - USA
- Minerals Council of Australia
- The University of Queensland
- Indogreen Group - Indonesia
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Kapuas Tunggal Persada - Indonesia
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Australian Commodity Traders Exchange
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Ind-Barath Power Infra Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Savvy Resources Ltd - HongKong
- White Energy Company Limited
- SMG Consultants - Indonesia
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Lanco Infratech Ltd - India
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