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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, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- White Energy Company Limited
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- ICICI Bank Limited - India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- The University of Queensland
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- India Bulls Power Limited - India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- PTC India Limited - India
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Energy Development Corp, Philippines
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
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