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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, 27 November 15
FOB RICHARDS BAY COAL SWAPS UP FROM LAST WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up week over week and month over month.
The Q1’ 2016 swa ...
Thursday, 26 November 15
ITALY'S STEAM COAL IMPORTS EXPECTED TO REACH 16 MILLION TONS AND COKING COAL IMPORTS TO AMOUNT TO 4 MILLION TONS - ASSOCARBONI
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
- “Coal has made huge steps towards environmental sustainability, making itself t ...
Thursday, 26 November 15
DRY BULK MARKET WILL REBOUND EVENTUALLY, BUT THINGS WILL BECOME EVEN WORSE BEFORE THEY IMPROVE SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market’s benchmark, the Baltic Dry Index (BDI) reached an all-time late last week and has failed to rebound significantly eve ...
Thursday, 26 November 15
Q3'16 FOB NEWCASTLE COAL SWAP FALLS 27.5% SINCE 20 FEB 2015
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $5 per ton (12.05%) month over month to US$ 36.50 per ton. The s ...
Wednesday, 25 November 15
INDIA'S POWER GENERATORS FACE LOW, FALLING UTILISATION RATE - FITCH
COAlspot.com: Fitch Ratings says in a new report that the utilisation rate of India's thermal power generation capacity continued to decline in ...
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- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Global Coal Blending Company Limited - Australia
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Australian Coal Association
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- Planning Commission, India
- Indogreen Group - Indonesia
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- The University of Queensland
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
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