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Wednesday, 09 June 21
MARKET INSIGHT - INTERMODAL
 “Counter cyclical investments.” usually take place by investing in a “bad” market at the point that ensures that the acquired asset exposes the buyer less. This has always been the essence of investing in most industries. Of course, like everything else, it’s is easier said than done when a market is going through a trough. Apart from the purchase cost, you still have to spend money in order to subsidize the asset until the market recovers. And of course, there is always the question of whether the market has reached a bottom or not. Anyway, all of these are known.
So now that we are experiencing a bullish dry bulk market and a phenomenal container market, it might be logical to speculate that tankers are not far behind on their way to recovery. With that said, investing in tankers is the only counter cyclical move you could do today at least within the 3 vanilla sectors.
Currently, the tanker market continues to remain weak on the back of constrained oil supply from OPEC+, but last year’s record high crude oil inventories have drawn down extensively, currently are at the bottom of the 5 year average range. At the same time, oil demand is set to recover signaling that the tanker trough might be hopefully ending. Goldman Sachs projects oil demand to increase by +5.0 million barrels per day over the next 6 months, with this summer particularly likely to witness the biggest ever oil demand increase. Additional oil supplies will need to flow into the market; OPEC+ has already decided to gradually increase production through July. A favorable scenario would dictate a further increase in OPEC+ supply by Q4, even if Iranian barrels return to the market, in order to cope with the demand.
But up to this date, despite a lackluster tanker freight market, asset values have increased as underlying steel prices have reached record high levels providing support. The increase in tanker asset values has been more pronounced for younger units, where the majority of SnP interest lies, rather than older ones.
Since January, approximately 124 tankers have changed hands, with the majority being AFRAs (58), followed by VLCCs (41) and SUEZMAXs (25). It makes sense for shipowners to look into buying second hand crude ships purely out of speculation as a tanker recovery is well overdue. The majority of the ships sold were in the 13-17 years age bracket, mostly due to high supply of candidates (e.g. approx. 38% of the Aframax fleet is above 15Y Old). It is certain that a lot of buyers bidding on 12-13 year ships would also go after 10Y or 8Y old tonnage if there was availability.
Recently, we have seen an increase in interest for ships built in after 2010 and almost no interest for older ships with the asset value gains shaped accordingly. Indicatively, 10Y old Aframax values are estimated to have increased by +27.0% since Q4 2020, while 15Y old values have only gained +14.0% over the same period. It might make sense to assume that since the anticipated recovery is yet to be seen, buyers are not willing to risk it on older ships. But given what we are currently witnessing on the dry and box sectors is this wise?
We see 10-15 year old container ships that a year ago might have being sold at demolition levels now being fixed for 4-5 years in the low 40k for further trading. We are witnessing the so called obsolete 28k handy fetching above 20k p/d. Although the tanker regulatory environment, makes older crude tankers less competitive in traditional trades where oil majors are involved even in a tanker recovery, the 15Y Old to 5Y old ratio at this point being at approx. 40% (the lowest we have seen is 30% during 2013 and the highest 60% during 2009) might be enticing enough to invest into an older asset and take advantage of a broader tanker market recovery in the near future. In other words, even older units can benefit in a market recovery.
As in the famous quote “A rising tide lifts all boats.”
By Timos Papadimitriou,
SnP Broker
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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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Sarangani Energy Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- GMR Energy Limited - India
- PTC India Limited - India
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Indogreen Group - Indonesia
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
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