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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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- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Power Finance Corporation Ltd., India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Asmin Koalindo Tuhup - Indonesia
- OPG Power Generation Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Australian Coal Association
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Bahari Cakrawala Sebuku - Indonesia
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
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