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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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Saturday, 08 May 21
THE COAL-TO-RENEWABLES TRANSITION TAKES OFF - IEEFA
Pre-Biden changes underscore coming 10-year wave of coal plant retirements
The traditional S-curve growth exhibited by disruptive te ...
Friday, 07 May 21
CHINA'S TOTAL COAL IMPORTS FOR 2020 REACHED A VOLUME OF 304 MILLION TONS - ASSOCARBONI
Our benchmarks, manufacturing Countries like China, Germany, Japan, India, South Korea and Taiwan will continue to use a mix of coal and nuclear to ...
Friday, 07 May 21
SEABORNE WORLD COAL TRADE CLOSED 2020 IN NEGATIVE - ASSOCARBONI
Coal confirmed its leadership as leading fuel for electricity generation also in 2020, accounting for 38% of overall production. For the first time ...
Friday, 07 May 21
INDONESIA'S THERMAL COAL EXPORTS IN 2020 DECREASED BY 13%; INDIA REMAINED THE TOP DESTINATION FOR INDONESIAN COAL - ASSOCARBONI
An increase in seaborne trade is forecast for 2022, driven by markets in Southeast Asia, where growing demand for coal from Bangladesh, the Philipp ...
Friday, 30 April 21
HIGH-SULPHUR FUEL OIL SALES REBOUND AFTER PRE-IMO 2020 - BIMCO
HSFO sales are up 47.2% from Q1 2020, reaching 3.1m tonnes. This is however still less than a third of high-sulphur fuel sales in Q1 2019, before t ...
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- Malabar Cements Ltd - India
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Australian Coal Association
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- PTC India Limited - India
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Petron Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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