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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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Friday, 09 July 21
CAN WE EXPECT AFFORDABLE POWER SUPPLY BY REPLACING COAL BASED POWER WITH LNG? - FINANCIAL EXPRESS
Bangladesh government’s recent decision to cancel the contracts for 10 coal fired power plants in late June 2021 has invited interest in the ...
Thursday, 08 July 21
STRONGEST HALF YEAR FOR SHIPPING MARKETS SINCE 2008 - CLARKSONS
A year on from peak trade disruption, we update our half year report for the shipping industry profiling a strong recovery and some exceptional ind ...
Tuesday, 06 July 21
INDONESIA COAL PRICE REFERENCE RISES TO 112 MONTHS HIGH IN JULY 2021; 121.15% HIGHER COMPARED TO THAT IN JULY 2020 PRICE
COALspot.com: The Indonesia coal price reference for July 2021 fixed at US$ 115.35 per ton FOB vessel.
The Indonesia coal price referenc ...
Tuesday, 06 July 21
INDONESIAN COAL EXPORTS FELL BY 37% YOY IN 1Q21 DUE TO ADVERSE WEATHER CONDITIONS - FITCH RATINGS
Chinese coal imports declined by 25% yoy in 5M21as a result of both restrictions on Australian coal and the high base in 2020. Import volume in Jan ...
Tuesday, 06 July 21
INDONESIAN 4,200 INDEX HAS ALSO INCREASED TO OVER USD50 PER TONNE SINCE MAY THIS YEAR REFLECTING STRONG CHINESE IMPORT DEMAND - FITCH RATINGS
Price Surge Since March
APAC thermal coal has resumed its price surge since March this year. The benchmark Newcastle 6,000kcal/kg grade c ...
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- Wood Mackenzie - Singapore
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Bhatia International Limited - India
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- GMR Energy Limited - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Tamil Nadu electricity Board
- The University of Queensland
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Aditya Birla Group - India
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
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