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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, 23 December 15
FOB NEWCASTLE COAL SWAP CLOSES FIRM
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery up $0.45 per ton (1.22%) month over month to US$ 37.20 per ton. The swap wa ...
Tuesday, 22 December 15
3800 GAR INDEX CLOSED AT US$ 22.03 PER TON; DOWN 0.15% W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.03 per ton (-0.07 %) week over week.
According to the CS (i) coal (system generated ...
Monday, 21 December 15
Q3' 2016 CFR SOUTH CHINA COAL SWAP CLOSED SLIGHTLY LOWER COMPARE TO Q1'16 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery up US$ 0.20 (0.48%) per ton month over month.
A commodity swap is a ...
Sunday, 20 December 15
THE FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The BDI facing all time low's this week. The bulk dry index closed at 477 points on 18 December 2015.
The cape index was als ...
Friday, 18 December 15
WHEN IS A MASTER ENTITLED TO REFUSE DAMAGED CARGO? A REMINDER - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
A master’s authority to clause bills of lading issued by or on his behalf can sometimes become the cause of disagreeme ...
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- Petrochimia International Co. Ltd.- Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- CNBM International Corporation - China
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- The University of Queensland
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Heidelberg Cement - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Deloitte Consulting - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Eastern Energy - Thailand
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Marubeni Corporation - India
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