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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 $13m. Dry bulk fundamentals, particularly on the demand side with the Chinese economy maturing, don’t look helpful at all (see SIW 1207), but with the 5 year old price at almost half that of a newbuild, who really knows what the longer-term opportunity might be?
Fortune favours the brave, but they also say that fools rush in. The outlook seems scary but investors might also have half an eye on their peers who invested at low points in the price cycle in the past. That’s the beauty of volatile and cyclical sectors, but it’s tricky food for thought for shipping investors. Are they willing to party like it’s 1999? Have a nice day.
Source: Clarksons
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Monday, 30 November 15
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
ASSOCARBONI is in favour of an international mechanism to provide financial support to countries building high efficiency low emission coal plants. ...
Monday, 30 November 15
CS 5000 GAR COAL INDEX FIRM D-O-D; WEAK W-O-W
COALspot.com: The 5000 GAR CS (i) coal index up slightly day over day.
According to the system generated index, the CS 50 (5000 GAR coal) was ...
Monday, 30 November 15
CFR SOUTH CHINA COAL SWAPS REMAINED UNCHANGED FROM LAST WEEK
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.50 (9.78%) per ton month over month.
A commodity swap ...
Sunday, 29 November 15
CAPE INDEX SURGES 383 POINTS WEEK OVER WEEK, BOOSTS BALTIC DRY INDEX
COALspot.com: The Baltic Dry Index, a measure of shipping rates, fell to 498 points on 20 November and touched a 30-year low, but on 27 November th ...
Friday, 27 November 15
INDONESIA COAL SWAPS: WEEK ENDING 20 NOVEMBER CLOSED HIGHER COMPARED TO THE PREVIOUS WEEK
COALspot.com: Indonesian coal swaps for delivery Q1 2016 declined month on month and up on week over week. Coal prices seen slight improvements thi ...
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- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Directorate Of Revenue Intelligence - India
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- White Energy Company Limited
- Barasentosa Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Parliament of New Zealand
- Central Electricity Authority - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Essar Steel Hazira Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
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