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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, 27 May 21
CHINA POWER DEMAND EXCEEDS PRE-COVID-19 LEVELS; THERMAL OUTPUT STRONG - FITCH RATINGS
Rising Consumption: Total power consumption rose by 21.2% yoy to 1,921.9GWh in 1Q21 due to the fast recovery of China’s economy, after a drop ...
Thursday, 27 May 21
CHINA'S POWER DEMAND EXCEEDS PRE-PANDEMIC LEVELS; RENEWABLES TO DRIVE DEVELOPMENT - FITCH RATINGS
China's power consumption exceeded the pre-Covid-19 levels in 1Q21 due to the country's fast economic recovery, with strong output from the ...
Wednesday, 26 May 21
THE INDONESIA COAL PRICE REFERENCE FOR MAY 2021 SETTLES AT US$ 89.74 PER TON
COALspot.com: The Indonesia coal price reference for May 2021 settles at US$ 89.74 per ton FOB vessel.
The Indonesia coal pric ...
Wednesday, 26 May 21
MARKET INSIGHT - INTERMODAL
Last year crude tankers’ newbuilding contracting activity was devastated by the economic effects of the Covid-19 pandemic and the cloud of un ...
Wednesday, 26 May 21
NEW POWER AND ENERGY MASTER PLAN MUST BE DESIGNED IN BANGLADESH'S BEST INTERESTS, NOT JAPAN'S - IEEFA
JICA must deliver a low or zero emissions plan as promised, not fund Matarbari 2 coal plant
Clear understandings from the Bangladesh ...
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- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Videocon Industries ltd - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Parliament of New Zealand
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Standard Chartered Bank - UAE
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- White Energy Company Limited
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Independent Power Producers Association of India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sojitz Corporation - Japan
- The University of Queensland
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Economic Council, Georgia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
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