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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, 28 April 21
MARKET INSIGHT - INTERMODAL
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Monday, 26 April 21
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Wednesday, 21 April 21
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Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
Sunday, 18 April 21
INDONESIA LIKELY TO WITNESS 119 OIL AND GAS PROJECTS STARTS ACROSS VALUE CHAIN BY 2025, SAYS GLOBALDATA
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...
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- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Merrill Lynch Commodities Europe
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Electricity Generating Authority of Thailand
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Planning Commission, India
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Australian Coal Association
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
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