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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 $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Wednesday, 30 December 15
FINAL DEALS OF THE YEAR TAKING PLACE, AS SHIP OWNERS PREPARE FOR 2016 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The Holidays’ investment lull has taken a grip over the newbuilding and S&P market for second hand vessels, as shipbrokers are reporting ...
Tuesday, 29 December 15
CFR SOUTH CHINA COAL SWAPS ROSE MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.68 (1.64%) per ton month over month.
A commodity swap is ...
Monday, 28 December 15
Q2' 15 U.S. STEAM COAL EXPORTS TOTALED 7.0 MMST; DOWN 16.9% FROM Q1 2015 - EIA
COALspot.com: U.S. coal production during second quarter 2015 totaled 211.1 million short tons.
According to EIA’s preliminary quarterly ...
Monday, 28 December 15
NOVEMBER NEWCASTLE COAL EXPORTS DECLINED 11.87%; THE AVERAGE PRICE OF COAL EXPORTS ROSE 1.37%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $1.120 billio ...
Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
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- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- PTC India Limited - India
- Parliament of New Zealand
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Chamber of Mines of South Africa
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
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