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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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Tuesday, 08 December 15
HOW TO MITIGATE LEGAL RISKS WHEN PURCHASING BUNKERS - LESSONS LEARNED FROM THE OW BUNKER COLLAPSE - THE SWEDISH CLUB
KNOWLEDGE TO ELEVATE
About a year has passed since OW Bunker & Trading A/S filed for bankruptcy. The collapse shows that there are signifi ...
Monday, 07 December 15
5000 GAR CS (I) COAL INDEX REMAIN THE SAME OVER LAST WEEK
COALspot.com: The 5000 GAR CS (i) coal index remain the same over last week.
According to the CS (i) coal (system generated) index, the CS 50 ...
Monday, 07 December 15
COAL DEMAND IN 2016 FAILS TO SUPPORT PRICES; CFR SOUTH CHINA COAL SWAPS SEEN AT $US 42 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 1.70 (3.88%) per ton month over month.
A commodity swap ...
Sunday, 06 December 15
THE BDI DECLINED BY 3.09 PERCENT TO 563 POINTS ON 4 DECEMBER
COALspot.com: The BDI declined by 3.09 percent to 563 points on 4 December 2015.
The Cape index was also declined by 10.01 percent to 890 poin ...
Sunday, 06 December 15
DRY BULK MARKET ON REVERSE MODE, SET TO BREAK NEW ALL-TIME LOWS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been the negative “star” of the shipping industry for quite some time. In fact if it wasn’t for the boomi ...
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- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- VISA Power Limited - India
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- White Energy Company Limited
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- PTC India Limited - India
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Australian Coal Association
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Manunggal Multi Energi - Indonesia
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Anglo American - United Kingdom
- The University of Queensland
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
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