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