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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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Saturday, 17 July 21
COAL PRICES TRADE AT DECADE HIGH OF $140 PER TONNE, HERE ARE SOME FACTORS AT PLAY: CNBC-TV18
Coal prices are trading at $140 per tonne. In the last one week, coal has seen more than 8 percent gains; the last one month has seen 24 percent ju ...
Thursday, 15 July 21
U.S. FOSSIL FUEL CONSUMPTION FELL BY 9% IN 2020, THE LOWEST LEVEL IN NEARLY 30 YEARS - EIA
U.S. fossil fuel consumption fell by 9% in 2020, the lowest level in nearly 30 years
In 2020, total consumption of fossil fuels in t ...
Thursday, 15 July 21
IN 2020, U.S. COAL PRODUCTION FELL TO ITS LOWEST LEVEL SINCE 1965 - EIA
U.S. coal production totaled 535 million short tons (MMst) in 2020, a 24% decrease from the 706 MMst mined in 2019 and the lowest level of coal pro ...
Wednesday, 14 July 21
MARKET INSIGHT - INTERMODAL
In its latest Global Economic Prospects report, the world bank recorded the strongest post-recession global growth in 80 years, but emerging and de ...
Tuesday, 13 July 21
JAPAN STILL SEEKING TO EXPLOIT COAL POWER LOOPHOLES - IEEFA
JBIC wants to continue burdening developing nations with its expensive coal-fired power technology
Japan is continuing to push its expensive c ...
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- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Interocean Group of Companies - India
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- SMG Consultants - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- MS Steel International - UAE
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Aditya Birla Group - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Attock Cement Pakistan Limited
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- VISA Power Limited - India
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- GMR Energy Limited - India
- White Energy Company Limited
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Posco Energy - South Korea
- Xindia Steels Limited - India
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
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