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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
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Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
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Monday, 08 January 24
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Capesize
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Friday, 05 January 24
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Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
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- The Treasury - Australian Government
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- Renaissance Capital - South Africa
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- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
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- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
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- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
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- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Parliament of New Zealand
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- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
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- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- White Energy Company Limited
- Chamber of Mines of South Africa
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- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
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- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Minerals Council of Australia
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- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
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- Indo Tambangraya Megah - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
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- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
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- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
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- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
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- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Attock Cement Pakistan Limited
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- MS Steel International - UAE
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Mintek Dendrill Indonesia
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