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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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Friday, 05 January 24
BANGLADESH’S 2023 COAL-FIRED POWER OUTPUT TRIPLED, EASING SHORTAGES - REUTERS
Bangladesh nearly tripled its coal-fired power output in 2023, a Reuters analysis of government data showed, helping it tide over the worst power s ...
Tuesday, 02 January 24
COAL TRADE CONTINUES TO HEAD EAST - BALTIC EXCHANGE
The global coal trade, once concentrated in the Pacific and Atlantic basins, is undergoing a significant transformation, as highlighted in the Inte ...
Tuesday, 02 January 24
COAL CARGOES: AVOIDING EXPLOSION AND SELF-HEATING - GARD
KNOWLEDGE TO ELEVATE
Despite its contribution to greenhouse gas emissions, global coal consumption climbed to an all-time high in 2022 and is ...
Tuesday, 02 January 24
SINOPEC FORECASTS CHINA’S COAL CONSUMPTION TO PEAK AROUND 2025 - REUTERS
China Petrochemical Corp, or Sinopec, expects coal consumption to peak around 2025 at 4.37 billion metric tons, the state energy group said in an o ...
Thursday, 07 December 23
CHINA TO SET UP COAL PRODUCTION RESERVE TO STABILISE PRICES - REUTERS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
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- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Economic Council, Georgia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Bayan Resources Tbk. - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- VISA Power Limited - India
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- CIMB Investment Bank - Malaysia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Romanian Commodities Exchange
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Bhatia International Limited - India
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Intertek Mineral Services - Indonesia
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