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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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Thursday, 01 July 21
WHY INDIA’S SOLAR POWER TARIFFS ARE CLIMBING AFTER HITTING RECORD LOWS LAST YEAR - IEEFA
What’s behind the recent increase?
Solar tariffs are deflationary. Prices have fallen by 75% in seven years in India, and in 2 ...
Thursday, 01 July 21
END TO COAL POWER BROUGHT FORWARD TO OCTOBER 2024
Press Release: The deadline to phase out coal from Great Britain's energy system has been brought forward by a whole year, highlighting the UK& ...
Thursday, 01 July 21
WHY BUILD 600 NEW UNPROFITABLE COAL PLANTS? - DEUTSCHE WELLE
Governments in Asia are planning 600 new coal plants that could lose investors $150 billion and derail efforts to limit temperature rise in line wi ...
Thursday, 01 July 21
FIVE ASIAN COUNTRIES ACCOUNT FOR 80% OF NEW COAL POWER INVESTMENT - THE GUARDIAN
Five Asian countries are jeopardising global climate ambitions by investing in 80% of the world’s planned new coal plants, according to a rep ...
Wednesday, 30 June 21
DELTA DUNIA MAKMUR RECORDED AN IMPROVED REVENUE IN Q1 2021; REVENUE INCREASED BY 49% QOQ TO US$160 MILLION ON THE BACK OF COAL PRICE RECOVERY
PT Delta Dunia Makmur Tbk. (“DOID”) released its consolidated financial and operating results that include its primary and wholly-owned ...
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- Larsen & Toubro Limited - India
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- GMR Energy Limited - India
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Trasteel International SA, Italy
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- White Energy Company Limited
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Formosa Plastics Group - Taiwan
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Economic Council, Georgia
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- VISA Power Limited - India
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