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Wednesday, 17 March 21
MARKET INSIGHT - INTERMODAL
 Shipping market players are familiar with the inverse correlation between the freight market and demolition activity i.e. when the market picks up we usually observe demolition activity declining and vice versa, while the level of scrapping eventually contributes to a new market equilibrium.
In order for demolition activity to be impacted in either direction, market expectations for the medium term have to be aligned with actual freight market conditions and thus demolition activity reacts with some time lag to the current freight market environment. The decision to sell a vessel for scrap is not only driven by the state of the market cycle and expectations, but to a great extent by the offered scrap price at the time vs the price fetched at the 2nd hand market.
As we stand, owners of vintage tonnage are obviously trying to exploit the current sound performance across all Dry Bulk & Container segments and prefer to keep their vessels for further trading rather than turning to beach yards. Despite positive market conditions in these two segments, possible demolition candidates could be those old units that have to be docked for surveys and their Owners are not in favor of bearing this cost, or the parties that are looking for a fleet renewal. Still, in order to make the demolition decision tempting for them, scrap prices should rise further. Already, scrap prices have risen more than 10% since the beginning of the year, and are up more than 29% compared to last year.
So far during Q1 2021, the freight market and expectations in the Dry Bulk & containers segment have been extremely optimistic, whilst the wet market is still to recover from the severe downturn experienced as a result of oil supply cuts and soft demand amid the ongoing COVID-19 pandemic. YTD dry bulk scrapping rate in dwt terms is estimated -21% below the same period last year, while tankers scrapping is estimated +91.1% y-o-y.
However, taking a closer look at the tankers sold for scrap, we would expect that the current market conditions (with VLCC rates suppressed since the beginning of the year and recently turning negative) would favor the larger crude carriers towards scrap yards. Instead, since the beginning of the year, about 11 vessels were confirmed to be scrapped with half of them being Handysize or MR tankers, while the rest consist mainly of Aframax, two shuttle tankers and no VLCCs.
We could argue that maybe owners of the larger crude tankers have enough buffer from last year’s stellar earnings amid floating storage economics skyrocketing and thus can sustain adverse market conditions, but also expect that the market will turn a corner should OPEC+ reverses oil supply cuts in the next months. We could also argue that owners prefer to sell their vessels in the 2nd hand market, as the premium they are currently getting over selling them for scrap is quite substantial.
While scrap prices are expected to rise further during the 2H of the year amid increased demand for scrap restocking, it remains to be seen how all of the above factors will impact demolition activity across the different shipping segments, with expectations for tanker scrapping activity increasing nonetheless coming in higher.
By George Kallianiotis,
Valuation Department
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Therma Luzon, Inc, Philippines
- PowerSource Philippines DevCo
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
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- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Central Java Power - Indonesia
- Parry Sugars Refinery, India
- Bukit Baiduri Energy - Indonesia
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- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- VISA Power Limited - India
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- MS Steel International - UAE
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Marubeni Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
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