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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, 30 June 21
BUMA SIGNED MINING AGREEMENT WITH ADARO
PT Delta Dunia Makmur Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into an agreement for the p ...
Wednesday, 30 June 21
MARKET INSIGHT - INTERMODAL
The strong freight performance since the beginning of year has continued for the dry bulk market with earnings being at the highest level in over a ...
Monday, 28 June 21
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA THREATENS TO REVOKE 2,350 MINING BUSINESS PERMITS
The Ministry of Energy and Mineral Resources said that the revocation of mining business permits was in accordance with President Jokowi's inst ...
Sunday, 27 June 21
INDONESIA'S STATE-OWNED UTILITY PLN'S 2060 NET ZERO AMBITION NOT WITHOUT FLAWS AND GAPS - IEEFA
Indonesia on the right emissions reduction pathway but same old coal stories persist
Recent announcements by Indonesia’s state-owned uti ...
Saturday, 26 June 21
COAL PRICES HIT DECADE HIGH DESPITE EFFORTS TO WEAN THE WORLD OFF CARBON - WSJ
Rebounding electricity usage and scanty rainfall in China have added fuel to the rally
Coal prices have climbed to their highest lev ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Parliament of New Zealand
- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Goldman Sachs - Singapore
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Sical Logistics Limited - India
- Carbofer General Trading SA - India
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Heidelberg Cement - Germany
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- The University of Queensland
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
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