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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, 18 December 15
CHINA GROWTH SHOCK TO HIT ENERGY, SHIPPING, STEEL MOST - FITCH
Energy, shipping and steel would be the hardest-hit sectors in Asia-Pacific (APAC) in the event of a sharp slowdown in Chinese growth, says Fitch R ...
Friday, 18 December 15
WEEKLY U.S. COAL PRODUCTION REMAINS FLAT ACROSS ALL BASINS
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 17 December 15
THE LOW DEMAND AND EXCESS COAL OUTPUT, KEEP THE FOB INDONESIA COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swap for delivery Q1 2016 rose month on month and decline slightly week over week. For the week ended December 11, 20 ...
Thursday, 17 December 15
GLADSTONE PORT COAL RECORD LOOMING, EXPORTS UP 12% - GLADSTONE OBSERVER
COAL exports from Gladstone's port have taken a leap, with more than seven million tonnes leaving the wharves in November.
That increase i ...
Wednesday, 16 December 15
FOB RICHARDS BAY COAL SWAP SLUMP 5.5% FROM LAST MONTH
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 decline month over month and week over week.
The Q1’ 2016 &nbs ...
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- PTC India Limited - India
- Jindal Steel & Power Ltd - India
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- Essar Steel Hazira Ltd - India
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- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
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- Australian Coal Association
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- Merrill Lynch Commodities Europe
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- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Binh Thuan Hamico - Vietnam
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- Indian Oil Corporation Limited
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- Wilmar Investment Holdings
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- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
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- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
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- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
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- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
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- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- The University of Queensland
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
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- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Planning Commission, India
- Ambuja Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Bhatia International Limited - India
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- White Energy Company Limited
- GMR Energy Limited - India
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Indonesian Coal Mining Association
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
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