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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, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Energy Link Ltd, New Zealand
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Planning Commission, India
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- PTC India Limited - India
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Medco Energi Mining Internasional
- ICICI Bank Limited - India
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Globalindo Alam Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- The University of Queensland
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
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