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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, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Australian Coal Association
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Goldman Sachs - Singapore
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
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- Cement Manufacturers Association - India
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- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
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- Ministry of Finance - Indonesia
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- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
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- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
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- Ind-Barath Power Infra Limited - India
- MS Steel International - UAE
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- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
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- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
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- SN Aboitiz Power Inc, Philippines
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- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
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- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Parliament of New Zealand
- Vedanta Resources Plc - India
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Ministry of Mines - Canada
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- PTC India Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
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