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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, 16 December 15
MARKET INSIGHT - KATERINA RESTIS
On Friday 4th of December the meeting of OPEC was held in Vienna, Austria. Since its last meeting, oil and product stock levels have continued to r ...
Tuesday, 15 December 15
THE GOVERNMENT DECLARED THERMAL COAL BENCHMARK PRICE CRASHING ONCE AGAIN
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price down to below 2009 level. HBA has slumped by 1.69% mo ...
Tuesday, 15 December 15
API 5 FOB NEWCASTLE COAL SWAP FIRM W-W; WEAK M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $.13 per ton (0.35%) month over month to US$ 37.07 per ton. The swap w ...
Monday, 14 December 15
5000 GAR CS (I) COAL INDEX DECLINE US$ 0.04 PER TON W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.04 per ton (-0.10 %) week over week.
According to the CS (i) coal (system generated ...
Monday, 14 December 15
CFR SOUTH CHINA COAL SWAP IS STILL SLIDING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 0.93(2.18%) per ton month over month.
A commodity swap ...
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- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Goldman Sachs - Singapore
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Indian Energy Exchange, India
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- PTC India Limited - India
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- India Bulls Power Limited - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
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