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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, 10 June 21
INDONESIA COAL EARNINGS RECOVERY TO SLOW AFTER STRONG 1Q - FITCH RATINGS
Fitch Ratings expects the recovery in operating and financial performance of Indonesian coal miners and coal contractors to slow during rest of 202 ...
Thursday, 10 June 21
U.S. COAL PRODUCTION TO TOTAL 600 MMST IN 2021, 11% MORE THAN IN 2020 - EIA
EIA expects U.S. coal production to total 600 million short tons (MMst) in 2021, which is 61 MMst (11%) more than in 2020.
The increase is dri ...
Wednesday, 09 June 21
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
The In-Person Maritime Event
SHIPTEK INTERNATIONAL CONFERENCE & AWARDS 2021
culminates successfully in Dubai
Press Release: ...
Saturday, 05 June 21
KOMIPO INVITED 5600 NAR COAL OFFERS FOR THREE YEARS SUPPLY; 520,000 MT PER YEAR
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) has issued an international tender for total 1,560,000 MT of Bituminous Coal to be used a ...
Saturday, 05 June 21
IT'S TIME FOR THE BIDEN ADMINISTRATION TO CHAMPION RENEWABLE ENERGY IN THE PHILIPPINES, NOT NUCLEAR OR FOSSIL GAS - IEEFA
Fossil gas and nuclear investments risk locking in costly, outdated infrastructure for the long-term
The United States has spent the ...
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- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- The University of Queensland
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Port Waratah Coal Services - Australia
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Iligan Light & Power Inc, Philippines
- Vedanta Resources Plc - India
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- Indogreen Group - Indonesia
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- PTC India Limited - India
- Sakthi Sugars Limited - India
- Banpu Public Company Limited - Thailand
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Thai Mozambique Logistica
- Marubeni Corporation - India
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