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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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Thursday, 07 January 16
FOB NEWCASTLE COAL SWAPS DELIVERY Q1'16 REMAIN FLAT W-O-W; UP M-O-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $1.23 per ton (3.35%) this past week compared to the sam ...
Thursday, 07 January 16
SHIPPING WILL REMAIN VOLATILE AND INDISPENSABLE IN 2016 - MOORE STEPHENS
The ultimate definition of an optimist has been characterised as an accordion player with an answerphone. Such extreme optimism might be difficult ...
Wednesday, 06 January 16
NEW COAL PRICE PASS-THROUGH REGULATION BENEFITS CHINA IPPS - FITCH RATINGS
Fitch Ratings says the new Coal Price Pass-through Mechanism announced by the National Development and Reform Commission (NDRC) on 31 December ...
Tuesday, 05 January 16
BIG COAL MINERS PLAN HIGHER PRODUCTION THIS YEAR - THE JAKARTA POST
The country’s major coal miners plan to further boost production in 2016 although analysts estimate that an oversupply in the world’s c ...
Tuesday, 05 January 16
THE SHIPPING MARKET IN 2015 AND LOOKING FORWARD - BIMCO
Global economy: menacing clouds in the sky cast a shadow on global economic developments 2015 never really took off, even though the global economi ...
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- Ministry of Mines - Canada
- Baramulti Group, Indonesia
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- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Carbofer General Trading SA - India
- Planning Commission, India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
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- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
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- Mercator Lines Limited - India
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- TeaM Sual Corporation - Philippines
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- Orica Mining Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
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- Central Java Power - Indonesia
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- The University of Queensland
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Energy Development Corp, Philippines
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Bhushan Steel Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- The Treasury - Australian Government
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- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
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- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Semirara Mining Corp, Philippines
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Attock Cement Pakistan Limited
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
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