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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, 15 January 16
FOB INDONESIA COAL SWAPS FIRM SLIGHTLY LAST WEEK
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month over month and week over week.
According to AsiaClear OTC coal swap's r ...
Friday, 15 January 16
SHIPPING: 2016 STARTED WITH MISERY ACROSS THE BOARD FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As one would have expected, the dry bulk market starter the new year where it left off in 2015, plunging to never seen before depths, as the market ...
Friday, 15 January 16
U.S. WEEKLY COAL PRODUCTION ROSE ACROSS ALL BASINS: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 14 January 16
FOB RICHARDS BAY COAL SWAP FOR Q3 DELIVERY CLOSED $5.90 LOWER THAN Q1 PRICE
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coal ...
Wednesday, 13 January 16
U.S. COAL PRODUCTION DECLINED BY 109 MMST IN 2015; COAL EXPORTS DECREASED 21% Y-O-Y
COALspot.com: U.S. coal production declined by 109 million short tons (MMst) (11%) in 2015, the largest decline ever recorded, says EIA.
The 2 ...
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- Minerals Council of Australia
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Kepco SPC Power Corporation, Philippines
- Parry Sugars Refinery, India
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Planning Commission, India
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
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