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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 $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Friday, 25 December 15
WEEKLY US COAL PRODUCTION ESTIMATES DIP 8.5%
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 14.7 million shor ...
Thursday, 24 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SHED US$ 0.60 PER TON OVER WEEK, AND STANDS AT US$ 43.25 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Thursday, 24 December 15
GLOBAL MARINE FUEL REGULATIONS COULD SHOCK REFINING AND OIL MARKETS - OPEC | HELLENIC SHIPPING NEWS
IMO regulations call for global standards for sulphur content in marine fuel to be tightened to 0.5% from its present 3.5%. There is uncertainty ov ...
Thursday, 24 December 15
DRY BULKERS' VALUES ARE PLUNGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk carriers’ values are falling across the board, as the fall of freight rates is taking its toll, as is to be expected. In fact, accor ...
Wednesday, 23 December 15
SHIPPING MARKET INSIGHT - PANOS MAKRINOS
As we are heading towards the end of the year we could argue that most of those involved in the shipping industry share mixed feelings for 2015. Th ...
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- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- Bhatia International Limited - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Price Waterhouse Coopers - Russia
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Ind-Barath Power Infra Limited - India
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- The University of Queensland
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Orica Australia Pty. Ltd.
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Parry Sugars Refinery, India
- Kideco Jaya Agung - Indonesia
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement PLC, Thailand
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
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