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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, 16 June 21
MARKET INSIGHT - INTERMODAL
“While approaching the second half of the year and summer season is just around the corner, COVID vaccination programs are steadily moving fo ...
Monday, 14 June 21
'WISHFUL THINKING': WHY CHINA NEEDS AUSTRALIAN IRON ORE FOR 'MANY YEARS' TO COME - YAHOO FINANCE AU
A “wintry period”.
That’s what’s expected to happen to Australia’s economy “when” China st ...
Sunday, 13 June 21
COAL AND LNG’S SURGE IN ASIA PLAYS INTO RENEWABLE ENERGY HANDS - REUTERS
Liquefied natural gas (LNG) and thermal coal prices in Asia have been roaring ahead in recent months amid strong demand, but while welcome news for ...
Friday, 11 June 21
5 REASONS GLOBAL SHIPPING COSTS WILL CONTINUE TO RISE - ING
No short-term relief
Shipping costs have been growing strongly since the autumn of 2020, but the first months of this year have seen a new surg ...
Friday, 11 June 21
ASIA COAL PRICES SURGE, BUT CHINA-AUSTRALIA DISPUTE MEANS RALLY IS UNEVEN - REUTERS
Thermal coal prices across Asia have surged to multi-year highs amid strong demand and some supply constraints, but some types of the fuel have don ...
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- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Jaiprakash Power Ventures ltd
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Jindal Steel & Power Ltd - India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- The University of Queensland
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Global Coal Blending Company Limited - Australia
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Central Electricity Authority - India
- MS Steel International - UAE
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Aditya Birla Group - India
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- McConnell Dowell - Australia
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Merrill Lynch Commodities Europe
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
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