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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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Sunday, 18 April 21
WORLDSTEEL RAISES 2021 STEEL DEMAND GROWTH FORECAST TO 5.8% - WORLDSTEEL
The World Steel Association (worldsteel) today released its Short Range Outlook (SRO) for 2021 and 2022. worldsteel forecasts that steel demand wil ...
Sunday, 18 April 21
CHINA'S Q1 COAL OUTPUT RISES 16% ON STRONG DEMAND FOR WINTER HEATING - REUTERS
China’s coal output rose 16% in the first quarter from the same period last year, bolstered by strong demand for winter heating and robust in ...
Wednesday, 14 April 21
INDIA HAS A RECORD LEVEL OF STOCKPILED COAL DAMPENING NEED FOR NEW DOMESTIC MINES - IEEFA
Proposed coal mining expansions at odds with excess supply
India has stockpiled a record 132 million tonnes of coal – enough t ...
Wednesday, 14 April 21
BANGLADESH NEEDS A RENEWABLES FOCUS, NOT A SWITCH FROM 'COAL TO GAS' - IEEFA
Renewables are cheaper and more sustainable than gas imports, and can provide better energy security in developing nations
The emerg ...
Wednesday, 14 April 21
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 1.10 PCT - XINHUA
China Taiyuan coal transaction price index stood at 138.05 points Monday, down 1.10 percent week on week.
The index, released by Chi ...
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- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Uttam Galva Steels Limited - India
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- Oldendorff Carriers - Singapore
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Neyveli Lignite Corporation Ltd, - India
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- MS Steel International - UAE
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
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